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LuxePulse Report: E-commerce in China Comes to Fashion’s Rescue

As explained in our recent article Shanghai’s First ‘Cloud Fashion Week’ Offers Egalitarian Silver Lining and Points the Industry’s Way Forward, it’s new digital experiences that are going to make fashion more accessible and relevant. Seeing Patek Phillipe go from ‘I wouldn’t say yes to e-commerce‘ to facing the reality, makes the message clear.

That same thread is reported on in the latest LuxePulse Fashion, a quarterly report from Reuter Intelligence that gives businesses market analysis and news on brand campaigns, influencer collaborations, digital activations across Chinese social platforms and more.

LuxePulse is available via an annual subscription, however for Q1 2020, Reuter Intelligence is providing LuxePulse – also available in Beauty and Hospitality sector reports – on a complimentary basis. Make contact here to request your copy.

The following is an excerpt from LuxePulse Fashion: E-commerce to Luxury Fashion’s Rescue

According to recent research by GfK China, 40% of consumers increased their frequency of buying online. Consumers have also been shopping across an increasing number of platforms, including third-party applications, brand websites, and WeChat Mini-Program stores. Interestingly, lower-tier cities appear to be fully embracing online shopping. Twice the number of first-time online shoppers came from Tier 2 and below cities compared to those from top-tier cities.

While Alibaba’s e-commerce platform Tmall showed a 50% decrease in the sale of cosmetic and skincare products in January, by February facial care, masks, and lip care sales had rebounded. Another e-commerce player, JD.com, helped retailers move online achieving sales of nearly RMB10 million (USD1.4 million) in the first seven days of its ‘cloud store’ campaign.

Businesses that successfully navigated the past six weeks in China took note of this shift to online early on and tilted their focus from offline to online channels.

Local cosmetics company Lin Qingxuan had to close 40% of its stores, including all of its Wuhan-based shops. However, the company moved their 100+ in-store beauty advisors online to become influencers using WeChat to engage customers virtually. Thanks for this redeployment of staff, the brand’s Wuhan sales grew by 200% compared to the same period in 2019.

The Chinese division of a global sweets company sped up its digital transformation by cancelling offline Valentine’s Day activations, reinvesting resources into digital marketing, WeChat programs and O2O platform partnerships.

Similarly, Cosmo Lady, the leading underwear and lingerie company, enlisted employees to promote product within their social networks. To gamify the experience, all staff, including the company chairman and CEO, was ranked in terms of their sales results.

Overseas, fashion brands have also been turning to digital tools to accommodate for the home-bound Chinese consumers and professionals. For the Milan Fashion Week, the Italian Fashion Chamber created the “China, we are with you” initiative, which involved live-streaming of fashion shows and presentations as well as other content. The content was shared via the chamber’s website and Weibo. The live-streamed runway shows on Tencent were viewed by 16 million Chinese, while the Weibo live-stream attracted an additional 9 million viewers.

Individual brands have also turned to live-streaming. By Fang did a two-hour live-stream with Chinese buyers from its Paris showroom. Louis Vuitton accelerated its showroom digitalization process in the lead up to the Paris Fashion Week as guests from China, Japan, South Korea, and the US has to miss the fashion show. Instead, buyers and others could observe the latest looks on the brand’s virtual showroom.

While consumers are likely to still delay big-ticket item purchases, such as consumer electronics, approximately 60% of high-income respondents in the GfK research shared their plans to spend more in order to reward themselves after the epidemic. Some analysts are predicting ‘revenge spending’ to occur in the coming weeks and months thanks to luxury consumers’ pent-up demand. However, Kantar’s survey in February would indicate that luxury is among the worst hit areas for consumption in the short- and mid-term. 61% of survey respondents had reduced or cancelled their luxury spending. Once the outbreak is over, a fifth of consumers said they would continue to reduce their spending on luxury.

Irrespective of how rapidly luxury consumption bounces back, the heightened reliance on digital channels and e-commerce during the COVID-19 outbreak will leave a mark on the Chinese retail landscape. Consumers and brands alike are likely to prefer online over offline channels throughout the journey from discovery to purchase to on-going engagement.

Find sources and references in the full report
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The Luxury Conversation is wholly owned by Gusto Luxe, part of independent holding group, Gusto Collective, whose mission is to bring together the best in branding and tech agencies from Asia.

With offices in Shanghai, Hong Kong, Singapore and London, Gusto Luxe represents some of the world’s most celebrated luxury and premium brands, with clients including Harrods, Margiela, Sotheby’s, Swarovski, Swire Hotels, The Estee Lauder Companies and Tourism Australia.

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