U.S. blockbuster The Great Gatsby has inspired a plethora of marketing opportunities for luxury brands in the United States, including a full-scale New York costume exhibit from Prada, which designed part of the wardrobe for the film, and an ad campaign from Brooks Brothers that met with its fair share of ridicule for misuse of a famous quote from the book. However, it’s not just U.S. companies that see the film as a marketing opportunity–Gatsby-esque fashions have been cropping up in China as well.

Evan Osnos at the New Yorker managed to locate an online ad for a relatively inexpensive Chinese shirt company which takes a page from Brooks Brothers, asserting, “as soon as the protagonist, Gatsby, obtained fame and fortune, he went out and bought beautiful, brightly colored shirts that transformed his image in Daisy’s eyes. It’s true: put on a flower-print shirt, and it will show you the door to a whole new world!”

On the more luxe end of the spectrum, Vogue China is heavy on the Gatsby content, with a photo spread, movie-inspired jewelry slideshow, and “behind-the-scenes” footage. The magazine has put its own Chinese spin on a Great Gatsby-style photo shoot which takes after a similar version in Vogue‘s U.S. magazine. Featuring Prada and other brands that costumed the film, including Tiffany, the shoot dresses Chinese supermodels Du Juan and Sui He in Gatsby-inspired 1920s attire as they pose in decidedly modern locations of Beijing including Wangfujing’s high-end shopping area and the shiny Sanlitun complex. The magazine refers to the shoot as a “modern deduction of that resplendent, incomparable golden decade,” while also pointing out that the clothes are a modern take on classic styles. For marketing these looks in China, demonstrating the outfits as “modern” appears to be just as important as showing off their vintage appeal.

Neiman Marcus also hopes to use the film to up its culture quotient with Chinese readers, using its Chinese-language blog to discuss the designers featured. The post also shows a spread from U.S. Vogue‘s Gatsby photo shoot, which features similar designers but is set against a much more historic-looking background. Meanwhile, editorial fashion site Rayli.com had a slideshow devoted to Gatsby-style 1920s items that aspiring flappers could go out and purchase. Chinese-language fashion site Bomoda also recently sent out advice on how to recreate looks from the movie.

Response on Chinese social media to the trend has been positive, yet limited. The U.S. Vogue Gatsby photo shoot from Neiman Marcus made its way to microblogging platform Weibo, where it received praise from a segment of Chinese fashionistas, who raved about the clothes with effusive praise. In some cases, they even said the outfits were so beautiful, they made them want to cry.

The film is only being shown in Hong Kong and not on the mainland, despite a sizable amount of attention being granted by Chinese fashion sites to appearances by Chinese actresses Zhang Ziyi and Fan Bingbing at its Cannes debut. However, it is not entirely uncommon for well-read Chinese consumers to know of the story. According to commentators, the story is not without cultural resonance in China despite being set in 1920s New York. Osnos states, “to Chinese readers, who have read Gatsby (in translation or in English) for decades, the story has acquired new layers of relevance in recent years.”

Source: Jing Daily

After initially issuing its September profit warning and then reporting a dramatic turnaround last month, Burberry is back in a big way with its recently reported 20 percent sales growth for the year ending March 31, as well as record-breaking profit numbers.

The company has several things going for it that have helped it in the China market, including targeted expansion, a solid digital strategy, and an apparel-heavy merchandise collection.

Burberry’s digital strategy, which has been highly cognizant of e-commerce and social media, has paid off greatly, as a company spokesperson reported that the Chinese website’s traffic is up 70 percent. The label holds active accounts on four different Chinese social media sites and has over 400,000 fans on Weibo. Burberry stores in China also feature large interactive touch screens and sales staff armed with iPads in order to look up inventory online if it’s not available in the store.

The British trench coat giant is also pursuing a store expansion plan in China that counters many companies’ decisions to push into second-tier cities, instead focusing on the first tier in order to maintain exclusivity. The label plans to open three stores in Shanghai in the coming year.

There are several additional factors helping the brand in the midst of slowing growth for many other luxury companies. For starters, apparel, which makes up 60 percent of the brand’s inventory, is resisting slowdown effects in China much better than accessories, which are used more often for gifting purposes. In addition, since Burberry only entered China in 2010, it has so far avoided any effects of “brand fatigue.”

The brand has also not ignored Chinese tourists outside the mainland, installing Mandarin-speaking staff in its European stores.

The luxury slowdown for China isn’t over yet, however, and Burberry remains cautious about the upcoming year. However, as winners and losers begin to surface in the Chinese luxury market, the label appears poised to come out ahead for now.

Source: Jing Daily

Some big-name luxury brands may be down, but others — niche luxury brands — are on the way up in China.

Red flags went up when Louis Vuitton sales started to lag. However, Givenchy – LVMH’s lesser-known brand famous for dressing Audrey Hepburn – is picking up steam in the meantime, says China Daily. The brand opened its newest store in China in March. As Chinese shoppers tire of the same old brands and growth lags, niche brands are stepping in to liven things up.

Pucci, the high-end Italian women’s label, opened its first store on the Mainland last year, at the same time Stella McCartney came to Shanghai. Even Alberta Ferretti is testing out the waters, opening a location for its Philosophy brand in Hangzhou.

Others are hoping the Internet will entice Chinese shoppers to try new brands. One of the most popular online luxury retailers in China, Shangpin.com, signed an agreement with the Fashion Council of America in March that will get Chinese shoppers access to U.S. products. “We want to help designers gain popularity in China and meet the growing demands of our consumers by offering the world’s leading fashions,” said Lang Xueyue, Shangpin’s VP.

Representatives from Chinese online retailer Fifth Avenue Globe says niche brands accounted for half of its sales in 2012, up from 20-30 percent the previous year.

Niche brands are still too new to the country for their full effect to be felt, and in the meantime some more prominent brands are posting good figures. Bottega Veneta grew 41.5 percent year-on-year in China in 2012. And China is now Yves Saint Laurent’s third-largest market.

Zhou Ting, director of the Fortune Character Research Center, said, “The market will enjoy healthy development, with many choices for consumers.” She also said that it will be more difficult for luxury brands to earn money from China’s market in the future, although China will still lead global growth.

Source: Red Luxury

Amid the ongoing discussion on China’s luxury slowdown, many fashion brands are understandably concerned about what this means for their current and long-term potential in China.

The immediate effect of the slowdown has been to make the market more competitive and create winners and losers. To emerge as winners in this rapidly changing environment, it’s important for brands to understand the underlying trends that are shaping the market and redefining the traditional formula for success.

Evolving Consumers = Evolving Levers for Competition

The leading factor in this shifting landscape is that Chinese consumers are becoming more sophisticated. While this is generally good news for premium and luxury brands, it’s resulting in an increasingly complex and competitive market with some key characteristics.

Consumers are upgrading their tastes and requirements. China’s increasingly experienced consumers want to be more low-key in their spending and to differentiate themselves from their peers. This is creating opportunities for brands poised to capture this more sophisticated consumer, and challenges for those left behind as tastes change. At the same time, this trend is creating a growing divide between the demands of experienced and inexperienced consumers, a situation that brands need to skillfully navigate to fully capture their China opportunities.

The omni-channel consumer is on the rise. E-commerce and social media play heavily into the decision-making process of today’s more sophisticated consumers. In recent focus groups of offline and online luxury consumers conducted by my firm, both groups followed essentially the same process of “Social media to e-commerce via mobile, to e-commerce via PC, to store visit” before coming to a purchasing decision. This was true regardless of which sales channel they ultimately used, creating a multitude of contact points that didn’t exist a few years ago—contact points that brands must be smart about managing.

There’s less willingness to pay the “China Price.” Sophisticated, highly connected consumers are more aware of their options and more capable of accessing them. For example, internal benchmarking we have done at SmithStreet shows that women’s apparel prices average about 70 percent higher in China than in the United States, across brands and product categories. Consumers are acutely aware of this price difference and are ready to use a multitude of channels to bypass it, most importantly travel and overseas shopping agents. Chinese shoppers going abroad are welcomed by brand managers in Europe and the United States, but recapturing this lost revenue is one of the greatest challenges facing brands’ China organizations.

Structural Challenges

China’s crackdown on extravagance and rising operating costs have been well documented and there is no need to detail them here. Less talked about, however, is the paradox posed by the evolution of the e-commerce channel.

While growing to  $190 billion in 2012, for the most part, Chinese e-commerce remains the domain of discount-focused consumers and retailers competing primarily on price. The resulting price pressure has been felt most acutely by traditional mass-market retailers, many of whom are beginning to view e-commerce as a key source of competition.

Despite this focus on price, consumers are willing to spend more on individual items as they gain experience (and trust) in the online channel: the common perception of an ‘expensive’ online item has doubled from $80 in 2010 to around $160 today. With e-commerce becoming more premium, luxury brands and retailers are entering the space in increasing numbers. As they do so, they are encountering a similar challenge to that faced by their offline stores: how to cater to their loyal, omni-channel customer while at the same time attracting the rising spending power of price-focused, heavy e-commerce users. Only by addressing both groups can brands unlock the full potential of the e-commerce channel.

Winners and Losers

How brands are doing in the market today is largely a reflection of how well they have been able to deal with these consumer and structural trends. Hermès, for example, is posting strong growth from sophisticated consumers while Louis Vuitton is weighed down by its prominent logo, from both a consumer and a policy perspective. Hong Kong fashion conglomerate I.T is well poised to capture the rising aspirant consumer looking for the latest new trends, while mainland casualwear retailer Meters/bonwe struggles with declining consumer relevance, online competition, high inventories, and rising costs.

At every point on the price spectrum, the days of “if we build it, they will come” are over: for the majority of brands, having as many locations as possible and entering a new city as soon as the real estate is available are no longer viable strategies. The formula for retail success in China is changing from a distribution-centric to a consumer-centric model, in which those brands that deeply understand their current and future customers are most likely to emerge as winners in this dynamic market.

In upcoming columns, we will take a closer look at some of these consumer trends and what brands need to do to create effective consumer-centric strategies for growth, starting with consumers’ growing unwillingness to pay the China Price.

James Button is a Senior Manager at SmithStreetSolutions, a growth consultancy based in Shanghai, where he works with a number of premium and luxury brands on their China entry, growth, and e-commerce strategies. Follow James and SmithStreetSolutions on Twitter.

(Opinions expressed by columnists do not necessarily reflect the views of the Jing Daily editorial team.)

Source: Jing Daily

Carolina Herrera will be expanding her China presence as part of a push into Asia with the Shanghai opening of her first China boutique planned for this fall. Although the move comes at a time when retail growth is slowing and the market is saturated with foreign brands, the label’s low-key aesthetic may help it appeal to Chinese consumers who are becoming less interested in logos and bling.

The new boutique will feature Hererra’s secondary line, CH Carolina Herrera. Its selection will be similar to that available in stores worldwide, including accessories and men’s and women’s ready-to-wear clothing. The brand may be tempted to create country-specific items, as a limited-edition line of bags in Singapore featuring the city-state’s national flower were wildly popular.

When asked by Women’s Wear Daily about her thoughts on the China market, Herrera struck a realistic note. “It’s saturated,” she said, noting that “maybe there are too many” international brands flooding in.

However, Herrera’s market advantage lies in the fact that sophisticated, less ostentatious designs have been faring well in China as the logo craze diminishes. This may be why minimalist German label Jil Sander opened two flagship stores in China in April and why Bottega Veneta has been seeing successful growth numbers, buoying conglomerate owner PPR’s China growth during the slowdown.

Source: Jing Daily

Iconic British high street fashion brand TOPSHOP will open its first store in Greater China on June 6th, 2013.

The 14,000 square foot flagship in Asia Standard Tower, positioned at the heart of Hong Kong’s bustling Queens Road Central, will bring the best of its cool British styles and trends, with more than 300 new pieces delivered every week.

TOPSHOP owner Sir Philip Green said: “This is a very exciting step in the continued growth of TOPSHOP as a global, yet uniquely British, brand. I am confident that fashion-loving Hong Kong customers will enjoy the retail experience and fantastic products that TOPSHOP offers them.”

In addition to the trend-led mainline collections, shoppers will be able to enjoy the best ranges from the British brand including Unique, the seasonal collection shown at London Fashion Week, Boutique, the brand’s premium limited edition line, and the designer collaborations TOPSHOP is recognised for worldwide.

TOPSHOP’s world-renowned and complimentary by-appointment Personal Shopping service will be conducted from a dedicated suite, where experienced personal shoppers will be on hand to offer style advice.

A host of special activities on the streets of Hong Kong will lead up to the launch which will be officiated by Sir Philip Green.

LAB Concept, a subsidiary of iconic luxury department store Lane Crawford, which opened a new contemporary fashion destination in Queensway Plaza, Hong Kong, in 2012, will manage the TOPSHOP business, providing the retail space and operational expertise, including staff and logistics support.

A TOPSHOP corner will also open in LAB Concept at Queensway Plaza later this year.

Andrew Keith, President of Lane Crawford, said: “From our own businesses, we’ve seen the growing demand from customers who want accessibility to fashion and beauty without compromise on design or trend. TOPSHOP is going to give them that and more — an unparalleled experience with cool product and great service in a dynamic environment that makes shopping fun.”

Source: Fibre2Fashion

As first-quarter earnings reports roll in for luxury brands, the effect of the China market continues to play an increasingly large role in their overall numbers. Although makers of certain goods such as watches and baijiu have taken major hits this quarter as China’s luxury crackdown continues, the results for major fashion labels and multi-industry luxury conglomerates are more of a mixed bag.

Jing Daily has taken a look at the role of China in some of the most talked-about earnings reports from the first quarter, and the news is not all bad. For some, such as Hermès, China continues to be the place to make up for lagging growth numbers elsewhere, while others with slower growth, such as PPR, saw individual brands do particularly well in the Chinese market.

Many of the companies discussed below have seen at least a third of their total sales coming from Asia and another huge portion from Chinese tourists buying abroad, making it crucial to examine the role China plays in their total growth.

Salvatore Ferragamo 

With the Asia-Pacific area comprising 36 percent of its sales, Florence-based Ferragamo had a highly successful first quarter by doubling its overall profits. Asia was up 6 percent compared with first-quarter growth last year, and China’s retail growth rose by 20 percent. The company’s chief executive Michele Norsa said that second- and third-tier Chinese cities in particular were driving these successful China numbers.

Burberry

Although Burberry experienced plunging stocks in September, it reported double-digit growth from the six months leading up to March 31, providing a spark of optimism for those worried about slowing markets. Asia sales, which comprise 42 percent of the group’s total revenues, rose 15 percent. This does not count Chinese travelers purchasing goods in Europe, as Burberry’s outgoing chief financial officer has stated that tourists from abroad make up half of the company’s Europe sales.

LVMH

The luxury conglomerate had a sluggish first quarter with 5.5 percent revenue growth attributed to a lack of Asia demand, but some of its divisions did better than others in the region, which comprises 33 percent of the company’s revenue. The wine and spirits division saw 12 percent growth thanks in part to growing Chinese demand for Hennessey Cognac, and the selective retailing division actually saw 42 percent growth in Asia as opposed to 9 percent in the United States.

PPR (Soon to be Kering)

Kering’s overall first-quarter numbers were labelled “disappointing” by the Savigny Luxury Index. However, according to the company, its biggest bright spot for China was Bottega Veneta, which was up more than 20 percent and was a factor in the brand’s 9 percent overall growth. Gucci’s revenue growth in China was “high,” according to the company’s first-quarter summary, with an overall 4 percent revenue increase. Asia sales accounted for 25 percent of the group’s total sales, a slight increase from last year’s 24.5 percent.

Hermès 

Despite having the lowest first-quarter growth since 2009, the luxury giant’s overall 10 percent rise in sales was boosted by a 17 percent increase in non-Japan Asia (which includes China, Macau, and Taiwan). In addition, Chinese tourists shopping abroad comprised 30 percent of the company’s sales last year.

Source: Jing Daily

The Hurun Chinese Luxury Consumer Survey 2013 found that French luxury brands are still the most popular among gift-givers, reports China Daily.

The top three brands for women’s gifts are all from France: Chanel, Louis Vuitton, and Cartier. Six of the 15 most popular gift brands for men are also French, including Hermes and Cartier.

Why?

Most major French luxury brands have high recognition and are well respected.

“The promise of glamor, sophistication and elite status that brands like Louis Vuitton and Chanel offer is appealing to many Chinese consumers who either have become wealthy or aspire to become wealthy,” said James Roy, senior analyst with China Market Research Group.

For the Chinese, a trusted brand is important in purchase decisions, especially for gift-giving because they don’t want to lose face. The Chinese are cautious and are slower to embrace new brands. Brands need to earn their trust and that takes time.

Despite some slumping in the Chinese market, French brands remain bullish about the country’s future prospects. In April Christian Dior released its first collection specifically for Chinese customers, designed by the brand’s art director, Raf Simons, in Shanghai.  Karl Lagerfeld, designer and creative director for Chanel, brought the label’s first ”demi-couture” collection to Shanghai in 2009, and has since been courting private clients in China.

Additionally, as more Chinese shop abroad, they are getting increased exposure to French brands in Europe.

“Many Chinese consumers are buying big luxury brand products while traveling overseas. More than half of the customers in a French luxury flagship store nowadays are from China,” said Zhao Qian, a fashion consultant and CEO of the Beijing-based Inlife International Group. “The peak time for the Chinese luxury products market is still far away. French luxury brands that have managed to get a toehold in China will not give up that easily. Instead, they will adjust their strategy to shift some of their focus to the market outside China,” he added.

Source: Red Luxury

Traditionally focused on Europe and the United States, Wolford has announced new plans to speed up development in Asia. The Austrian hosiery brand has cemented its desire to develop in the country with two recent store openings in the Greater China region. At the start of April, the brand also opened its first branch in Shanghai before celebrating its fifth store opening in Hong Kong just a few weeks later.

Shanghai’s Citic Square mall is the home to Wolford’s first directly-operated store in the area. The store measures 60m² and remains true to the traditional Wolford store concept. The brand has also recently announced plans to open a second branch in the city before the end of June.

Wolford’s fifth Hong Kong address is another directly-owned store and is located in the International Finance Centre. Overall, the company is looking to open 15 new points of sale in the Greater China area by June this year. Development started in the region several years ago with the installation of corners in department store. Today, the brand is speeding up activity in China in the hope that it bears a much larger effect on turnover.

Source: UK Fashionmag

Asia has surpassed the US to become the world’s biggest retailing market, offering $3.8 trillion in sales in 2011, or 41% of the global pie. Within this feverishly expanding industry, the luxury retail sector has dominated; the number of luxury stores in China has nearly doubled over the past five years. However, for the first time, the growths of mid-range retailers have outpaced the growths of their high-end counterparts.

“This is the first time this has happened,” says Sebastian Skiff, executive director of CBRE Retail, a real-estate services firm, in Asia. “It’s only natural that after being here for so long [the luxury retailers] are likely to grow at a slower pace. [The Chinese no longer] need to drip in brands – they want a relative amount of uniqueness. There is a lot of opportunity in China with value brands – and a lot of competition there,” he adds.

And companies are also taking note of this opportunity. Gap Inc. recently announced that it will add 35 new stores to their existing 47 in China. The company’s executives also said they would consider introducing company-operated Old Navy and Banana Republic to the world’s second largest economy, as reported by Wall Street Journal. Athletic wear company Adidas AG is stocking many of its China outlets with its lower-end NEO brand to cater to more price-conscious shoppers.

“Fast fashion” brands, such as the aforementioned Gap, provide shoppers with trendy items at a much lower price than upscale luxury brands. Chen Jing, a 20-year-old who makes 3,000 RMB ($485) a month working in Beijing, says she regularly shops at H&M and Zara. “I shop for style and look for popular brands,” Ms. Chen says.

While Western brands remain popular, another trend showing shift towards cheap chic is the embracement of homegrown brands. Local brands such as Me & City, Meters/bonwe, and Ochirly also provide fashionable options at reasonable prices.

Source: Red Luxury