Rebound Strategies for US Luxury Brands


The luxury industry is currently focused on the health problems associated with COVID-19, but further market disruptions also need to be considered. Some other consequences of this crisis include (but are not limited to): a probable global recession, a plunging stock market, inflation/heightened nationalism in China, supply chain disruptions, and a rise in Western Sinophobia. As a singular emergency in modern times, standard contingency plans might not work during this outbreak.

Together, this group of disruptions has crippled the entire luxury industry, and even if retailers effectively address one aspect of the crisis, they could still suffer permanent harm from some of the other effects. It’s a situation that calls for unprecedented measures and a transparent relationship between the private and public sectors.

Considering the low level of public trust in the US government — partly due to the disorganized and slow response to the COVID-19 crisis — we foresee that American luxury retailers will need additional time to rebound after the virus slows.

Another issue is that the US doesn’t have a recognizable retail luxury sector like Europe’s, and most of the country’s mainstream names are associated with “affordable” luxury such as Coach, Polo/Ralph Lauren, Michael Kors, and Kate Spade. With lower inherent values, awareness and loyalty will continue to decline for these brands because, when tougher times come for consumers, they will only invest in luxury goods that bring maximum value to their lives. A Hermès Birkin is an investment, but a Coach bag doesn’t have the same equity — nor the same worth as a status symbol.

And lastly, let’s not forget that over the past decade, American retailers have struggled to overcome the “retail apocalypse” by lagging behind in online-to-offline sales optimization. Now, this already fragile system is buckling under the weight of the COVID-19 situation, and Trump’s prolonged trade war with China has only worsened the impact on American retailers and consumers. “We paid a couple more billion dollars of tariffs — about $3.5 billion worth of tariffs in 2019, which we didn’t pay in 2016,” said Steve Lamar, president and CEO of the American Apparel and Footwear Association, to CNBC.

Let’s take a look at some rebound strategies that could be useful to American retailers during this unprecedented time:

Building a world-class customer service model

The luxury world has been successful in globalizing impeccable customer service, but for the newest generations of consumers, white-glove treatment implies much more than just concierge services. Today, brands must adapt to the world-class customer service model that Millennials and Gen Zers demand.

In this new model, digital experiences, prestige, convenience, high-end personalization, and efficiency are as important as delivering traditional customer services. Savvy brands that succeed at this understand that their physical stores must act as showrooms for customers where they can experience the brand, receive accurate information about product releases, test new products, and exchange ideas with staff members (who act as brand connoisseurs).

These interactions address our human urge to focus on essentials and build genuine connections with brands. This customer service model not only gives buyers impeccable service, but it also offers them the consciousness and recognition they crave. By inviting the luxury buyer in and empowering him or her to personalize a product — while also listening to their feedback — brands can transform the consumer into a co-creator. It’s an approach that naturally enables a brand to energize the relationship with their target base.

The foundation of this new customer service model is the team’s leaders and staff. Without them, top executives can’t formulate or develop the brand’s core values. The Ritz-Carlton is a perfect example of this direction since the luxury hotel chain promotes a company culture that promotes its staff as “Ladies and Gentlemen serving Ladies and Gentlemen.” In other words, the employees remain the company’s most important resource. Inside the Ritz-Carlton brand, leadership development is encouraged, and the staff is motivated to develop new skill sets.

Encouraging demand through targeted and patriotic marketing efforts             

Sophisticated ad campaigns with slogans like “Buy American” and “consume local” fall in line with today’s “America First” policy, but they didn’t originate with Donald Trump. In fact, this marketing philosophy has existed for decades, going back to President Hoover’s “Buy American Act” from 1933.

Over the years, consumers have seen various ads that play off a sense of national pride, where symbols of the American lifestyle were employed to encourage consumerism. And while most international luxury consumers don’t glorify the “Made in America” brand or pursue it with the same ardor as the “Made in Italy” one, that isn’t the case with US buyers. Americans tend to respond positively to this doctrine because they feel as if buying local is their patriotic duty.

A good example is Ralph Lauren, who built a fashion empire out of an “idealized version of the American dream.” He made the American prep lifestyle a commodity by invading every media channel with perfectly-styled ads promoting Ivy League values. This intelligent marketing strategy made the brand into one of the most successful and recognizable in America today. Other US retailers such as Tommy Hilfiger, Lilly Pulitzer, and J.Crew followed suit. This showed the rest of the world that the adoration of a rarefied American lifestyle that few enjoy could become a lucrative business idea.

We are an age when the American dream is in crisis, and social mobility is more static than it’s ever been, according to Axios. Therefore, dressing up in a sophisticated style has become a new snobbery, offering one motivation to follow their dreams.

Blending digital and physical

Ours is also an age of big digital retailers (Alibaba, Amazon), and surviving in their shadow is getting to be increasingly difficult. However, some retailers have managed to not only survive but thrive.

For example, Target had seen an incredible rebound since blending the brand’s online and offline experiences. The American retailer adopted digital transformation to engage with the “always-connected” younger consumer. But by putting the needs of the consumer first and understanding their lifestyle choices and shopping behaviors, Target also improved its customer service.

The US retailer optimized its online-to-offline experience by integrating and advanced technologies and optimizing its supply chain. But according to Digital Commerce 360, Target “credits much of its success with its ability to draw heavily on a large amount of data it gathers on customers.” Frankly, most US retailers have yet to achieve the level analytic capability that Target now practices and have fallen far behind many countries in the use of advanced cluster analysis.





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Should Brands Follow Net-A-Porter’s Animal Crossing Lead?


Animal Crossing: New Horizons, the new virtual game published by Nintendo, was dropped March 20 and has taken the world by storm since its release amid global COVID-19 lockdowns. While fans are busy dressing up their virtual avatars with fashionable items, the luxury fashion e-commerce company Net-A-Porter has become the first company to monetize this opportunity in China.

Net-A-Porter worked with multiple Chinese fashion designers, including staffonly, Marchen, Calvin Luo, Short Sentence, and Shushutong to create avatar skins from their spring/summer collections. Users can not only purchase those virtual skins, but also real clothing via Tmall. Here is how it works: they can contact customer service, and type “NAP animal crossing” to receive virtual skins.

Jing Take: 

Animal Crossing has become a space where young people can escape from the current chaotic situation in the world. The setup of the game is very simple, almost like a fairy tale version of The Sim, where users can customize their world from the ground up. For the many, many people at home and practicing social distancing, Animal Crossing allows its users to build a virtual wardrobe with luxury pieces that are hard to acquire in real life, from brands like Dior, Louis Vuitton, Burberry, and Gucci. Luxury brands have ventured into virtual gaming before to acquire new consumers and expand their brands. Net-A-Porter’s participation could open up more brands to the possibility of selling virtually first, then offline. It’s also a great new advertising space to boost brand exposure. And maybe, just in case, users would like to dress the same with their avatar in real life. While the game has taken off globally, its fashion configurations are only beginning to pick up steam in China. Brands who act fast to tap into this new trend and target the Chinese millennial and Gen-Z audience will strike marketing gold.

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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Why Digital Mastery is Needed to Survive COVID-19


Months ago, I spoke with one of the most luxurious food sellers about how to prepare for a digital future while creating a more persuasive purpose for the brand. In a rapidly changing world, the owners felt action was needed. Sales were flat, and the company wanted to start attracting more Gen Zers and young Millennials. They had deficits in brand positioning and storytelling, which made it difficult for the brand to connect with younger audiences (its core demographic was primarily in their 40s and 50s). Like many brands, it was aware that it needed to move toward a digital transformation but preferred to focus on its physical stores.

And then, when it was time to pull the trigger and implement some necessary measures, the brand postponed. The CEO gave me his reason, stating, “Our brand was built over 50 years in a traditional way. We don’t need to change at this point. We have time. We understand luxury. We will adjust when the right time comes.”

Sadly, the business completely crashed this month. The brand’s restaurants and retail shops around the world closed. Since it passed on the opportunity to build a digital brand, create new brand communities, and engage with customers on social media, it went out of business in just three weeks. Fifty years of heritage evaporated in an instant because the brand chose not to prepare for the future when it could have. Instead of spending a fraction of its advertising budget on improving the brand’s storytelling and digital footprint, it kept doing “business as usual” when the market had already been wildly disrupted. Complacency — not the virus — killed the brand.

Over the last few weeks, I’ve had many discussions with CEOs of brands in all categories about what to do during this moment. Brands that chose a wait-and-see approach to digital transformation in the past have now been left in the dark. If they are still in business, they don’t know nearly enough about changing customer sentiments, since they lack digital, real-time, consumer-insight tools. Before this crisis, many companies thought of those tools as “nice to have,” not realizing they would soon be essential lifelines. As a result, they’re unable to move quickly enough to engage with online consumers and compensate for their lost physical sales.

Succeeding in the digital realm takes a lot more than just deploying a web store. I refer to it as “cyber-luxury” — the ability to create highly-engaging and relevant end-to-end digital experiences that closely connect to physical buying experiences. For most brands today, the purchase journey starts online. Recently, I reconfirmed with brand owners in all categories including luxury beauty, luxury fashion, high-end jewelry, and luxury cars that even before the COVID-19 crisis most consumers decided they were going to purchase from a brand before they even entered the store. Today, going into a store is just about confirming a purchase.

What does this mean? It means that if consumers decide upon purchases before a store visit, a brand has to win them over digitally. And they have to address all aspects of the customer journey, including consumer sentiment changes, competitive dynamics, trending topics, concerns, and content. Brands that haven’t prepared for the digital age — and that’s most of them — will need to right now, or they risk not attracting consumers.

But the need for digital agility isn’t just limited to digital infrastructure. It starts with brand storytelling. Most brands still follow a style of positioning logic that was created before the dawn of digital media, one based on designs (logo, shape, features) and consumer awareness. This brand-building approach was relevant until about five years ago when recognition stopped being a decisive factor for driving growth.

Since Gen Zers are now digitally influencing the buying behaviors of the other generations, a brand’s main equity driver has become its purpose. Yet very few brands clearly or distinctly express their purpose. For example, after auditing a variety of luxury car brands, we found that most lacked a discernible purpose and clear storytelling. That was okay in the pre-digital age, but that’s not acceptable to today’s young and digitally-savvy customers. We found similar results in most luxury categories, including fashion, jewelry, beauty, and hospitality. They all lacked this precondition for success on digital channels.

If a brand’s digital interface is well-managed, it won’t just weather the current storm but will also dramatically improve its competitiveness. There are always enormous opportunities for agile brands, even in traditional, physical sectors like luxury cars, fine watches, or jewelry. A crisis can become an opportunity when brands stay ahead of market changes using digital means to create extreme value. And the best part? It doesn’t need to be expensive. Times of crisis call for smart investments with high ROI.

I am often asked why a brand in a traditional market like luxury must lead digitally. I respond by saying that a luxury brand must always lead. Our research shows that the perception of luxury is dependent on how innovative and inspiring a brand appears to consumers, which includes its ability to create social currency with social media and influencers. A brand that doesn’t master the digital realm won’t be perceived as a leading luxury brand. It’s as simple as that. I’ve seen a brand become irrelevant in only three years once consumers decided it was no longer an industry leader. The ability to digitally inspire creates extreme value.

That’s why complacent or passive luxury brands lose during a time of crisis, or even worse, become obsolete. It’s important to manage cash flow and keep operations running, but if it’s done at the expense of connecting with customers, a brand won’t survive. When life gradually returns to normal, the most innovative, agile, and creative brands will undoubtedly come out much stronger. Those are the digitally-savvy brands that create extreme value by empowering their employees to find outside-the-box solutions and relentlessly focus on their customers’ needs.

Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger





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Which Luxury Brands Will Collapse In A Crisis?


Months ago, I spoke with one of the most luxurious food sellers about how to prepare for a digital future while creating a more persuasive purpose for the brand. In a rapidly changing world, the owners felt action was needed. Sales were flat, and the company wanted to start attracting more Gen Zers and young Millennials. They had deficits in brand positioning and storytelling, which made it difficult for the brand to connect with younger audiences (its core demographic was primarily in their 40s and 50s). Like many brands, it was aware that it needed to move toward a digital transformation but preferred to focus on its physical stores.

And then, when it was time to pull the trigger and implement some necessary measures, the brand postponed. The CEO gave me his reason, stating, “Our brand was built over 50 years in a traditional way. We don’t need to change at this point. We have time. We understand luxury. We will adjust when the right time comes.”

Sadly, the business completely crashed this month. The brand’s restaurants and retail shops around the world closed. Since it passed on the opportunity to build a digital brand, create new brand communities, and engage with customers on social media, it went out of business in just three weeks. Fifty years of heritage evaporated in an instant because the brand chose not to prepare for the future when it could have. Instead of spending a fraction of its advertising budget on improving the brand’s storytelling and digital footprint, it kept doing “business as usual” when the market had already been wildly disrupted. Complacency — not the virus — killed the brand.

Over the last few weeks, I’ve had many discussions with CEOs of brands in all categories about what to do during this moment. Brands that chose a wait-and-see approach to digital transformation in the past have now been left in the dark. If they are still in business, they don’t know nearly enough about changing customer sentiments, since they lack digital, real-time, consumer-insight tools. Before this crisis, many companies thought of those tools as “nice to have,” not realizing they would soon be essential lifelines. As a result, they’re unable to move quickly enough to engage with online consumers and compensate for their lost physical sales.

Succeeding in the digital realm takes a lot more than just deploying a web store. I refer to it as “cyber-luxury” — the ability to create highly-engaging and relevant end-to-end digital experiences that closely connect to physical buying experiences. For most brands today, the purchase journey starts online. Recently, I reconfirmed with brand owners in all categories including luxury beauty, luxury fashion, high-end jewelry, and luxury cars that even before the COVID-19 crisis most consumers decided they were going to purchase from a brand before they even entered the store. Today, going into a store is just about confirming a purchase.

What does this mean? It means that if consumers decide upon purchases before a store visit, a brand has to win them over digitally. And they have to address all aspects of the customer journey, including consumer sentiment changes, competitive dynamics, trending topics, concerns, and content. Brands that haven’t prepared for the digital age — and that’s most of them — will need to right now, or they risk not attracting consumers.

But the need for digital agility isn’t just limited to digital infrastructure. It starts with brand storytelling. Most brands still follow a style of positioning logic that was created before the dawn of digital media, one based on designs (logo, shape, features) and consumer awareness. This brand-building approach was relevant until about five years ago when recognition stopped being a decisive factor for driving growth.

Since Gen Zers are now digitally influencing the buying behaviors of the other generations, a brand’s main equity driver has become its purpose. Yet very few brands clearly or distinctly express their purpose. For example, after auditing a variety of luxury car brands, we found that most lacked a discernible purpose and clear storytelling. That was okay in the pre-digital age, but that’s not acceptable to today’s young and digitally-savvy customers. We found similar results in most luxury categories, including fashion, jewelry, beauty, and hospitality. They all lacked this precondition for success on digital channels.

If a brand’s digital interface is well-managed, it won’t just weather the current storm but will also dramatically improve its competitiveness. There are always enormous opportunities for agile brands, even in traditional, physical sectors like luxury cars, fine watches, or jewelry. A crisis can become an opportunity when brands stay ahead of market changes using digital means to create extreme value. And the best part? It doesn’t need to be expensive. Times of crisis call for smart investments with high ROI.

I am often asked why a brand in a traditional market like luxury must lead digitally. I respond by saying that a luxury brand must always lead. Our research shows that the perception of luxury is dependent on how innovative and inspiring a brand appears to consumers, which includes its ability to create social currency with social media and influencers. A brand that doesn’t master the digital realm won’t be perceived as a leading luxury brand. It’s as simple as that. I’ve seen a brand become irrelevant in only three years once consumers decided it was no longer an industry leader. The ability to digitally inspire creates extreme value.

That’s why complacent or passive luxury brands lose during a time of crisis, or even worse, become obsolete. It’s important to manage cash flow and keep operations running, but if it’s done at the expense of connecting with customers, a brand won’t survive. When life gradually returns to normal, the most innovative, agile, and creative brands will undoubtedly come out much stronger. Those are the digitally-savvy brands that create extreme value by empowering their employees to find outside-the-box solutions and relentlessly focus on their customers’ needs.

Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger





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The Verdict On Shanghai Fashion Week


This season, Shanghai Fashion Week’s main stage was not the usual cluster of white tents found at the city’s Xintiandi retail hub. Instead, the entire week was taken online, facilitated by Alibaba’s e-commerce platform, Tmall. Facing unprecedented disruption to brands, stores and supply chains, the fashion industry’s elite chose to work together to pivot to “see now, buy now” (SNBN) livestream showcases, offering a unique proposition direct to China’s fashion consumers — a cloud fashion week.

This online event meant business, and amplification was a key objective. The Taobao platform has an overall reach of over 711 million active users, meaning all brand viewing figures increased massively in the most extensive “see now, buy now” demonstration from a fashion week to date. Viewing figures reached 2.5 million over the three-hour opening session alone; cities with the most viewing areas were identified as Shanghai, Beijing, and Chongqing, coming from a mostly female demographic.

A new take on the traditional industry format, Shanghai’s main impetus this season was simple: to ensure all the designers and brands who have made the city home had a voice this Fall 2020. In addition, given the current domestic retail difficulties, it aimed to facilitate sales for commercial brands. According to Robert Huo, General Manager of Womenswear of Tmall Fashion, a total of over 150 brands participated in the event.

This season, as the co-host, Tmall extended commercial recognition to a wider range of independent designers via the local fashion incubator Labelhood. As the partner of Shanghai Fashion Week, Labelhood funneled brands through its verified Tmall store while alternative virtual retail stores, such as Xintiandi pop-up, were also used by labels as a way of capturing sales during the week-long event.

Even with Alibaba’s help to educate brands on basic operations and marketing support, the organizers humbly admitted it was a learning curve for all involved. Some netizens complained of confusion in terms of QR codes and accessing content. Moreover, showcases were only visible on the Taobao app, therefore making it localized to Chinese speakers only. Despite the technical mishaps and varying expectations from participants and the public alike, brands and companies undeniably gave their all to the ambitious project undertaken by the trailblazing organizers.

The bravery of this trial-and-error approach, and what it achieved, establishes the fashion week as a dynamic testing ground for the global industry to analyze. Here Jing Daily speaks with some of the brands that took part, the consumers that purchased, and the influencers who watched on to gather insights. As the first fashion week to take place post the COVID-19’s outbreak, this was Shanghai’s opportunity to showcase its online prowess, strength in numbers, and enterprising vision.

The Balancing Act Between Sales and Branding

Throughout the week, different strategies and personalities shone through as each brand put their own spin on the SNBN model. Most independent designers on the Labelhood platform, for example, were more playful, using their slots in a more experimental rather than sales-focused manner.

“We weren’t aiming for sales. We made some sales on our current season, but we wanted to be artistic.”

Shushu/Tong’s co-founder Liushu Lei made their video presentation look like a show, which was played on repeat for the full length of their allocated slot. “We didn’t do a standard SNBN format as we only had some Spring 2020 in the online store,” the womenswear designer said after the show. “We weren’t aiming for sales. We made some sales on our current season, but we wanted to be artistic. In fact, I think it’s quite hard to make livestream sales look chic, so we chose not to do it and be more mysterious.”

Other brands such as Ffixxed Studios used the opportunity to play with the concept of the livestreaming show. Kain Pickering explained that he and his partner Fiona Lau had doubts around how to balance the branding and the sales aspect, while authentically reflecting the brand’s ethos. “We watched loads of very conventional livestreams, and we were advised to think about if it was a sales exercise or do it as a marketing experiment.” The brand finally settled on presenting a light-hearted, fun showcase and created a theatrical parody of a livestream featuring various brand ambassadors and real-life friends.

Menswear duo Private Policy’s livestream was equally aware of its individual brand identity. It selected Mia Kong, style director of Dazed China, to host its livestream — opting for a KOL which they felt best reflected their DNA. “When I think about livestreaming, I think about the super sales associate and KOL Li Jiaqi, which is not me at all,” Kong laughed as she mentioned her initial doubts when first approached by the US duo. Kong eventually agreed but acknowledged: “If they’d like to push for sales, they wouldn’t choose me” — indicating the brand’s maverick approach.

A Front Row, Engaging Experience For All Consumers

This new digital approach was good news for the average consumer who will never sit in the front row of a fashion show but is nonetheless immersed in fashion and wants an intimate look at the faces behind the brands. Take Lucy Li for example, a 25-year-old PR professional working in the food industry in Beijing, and a fan of discovering new labels.

A still from Angel Chen’s Fall Winter 2020 livestream show at Shanghai Fashion Week. Image: Courtesy.

“Interactions on a livestream can instantly draw you closer to those brands,” Li said. “You are associating the often clinical branding with a glimpse of the personality of the brand creator — their life story.” The young consumer explained that she had difficulties finding show schedules — even as a frequent user of the platform — and experienced other technical issues. “I loved the idea of it, but the actual execution seemed a bit rushed,” she noted, adding that at times the on-off sound during some designers’ livestream was disrupted, the visual layout looked quite busy, and it was a challenge to locate show listings on the app.

On the plus, she continued that the sales process was easy for those within China that wanted to make purchases. The sales infrastructure on Taobao’s Tmall is more advanced than an app like Instagram, which has only recently introduced a shop function. During a “see now, buy now” cloud session, viewers could click on favorite items at the bottom left corner of the screen and easily make a purchase.

Livestreaming brought an additional change this season: instant communication with active consumers. Sessions saw hosts address live questions, mostly focused on issues such as styling and fabrics. This feedback could be digested in real time by the designer who was then free to engage and make instantaneous responses.

This format, however, is already a trend in China, but the benefits from the fashion week’s experiment have been crucial. In particular, Xiao Bianzi, the host of Babyghost’s successful livestream session, outlined: “Because we were communicating with our clients real time, via WeChat group for example or on air, we were constantly being direct by their demands. It’s almost like co-creating with your clients.”

This sense of progressive dialogue is now driving brands, such as Babyghost, who have been showing at fashion weeks in New York and Shanghai since 2014. “More and more, our collections are inspired by the girls surrounding us or who are live with us, fans, it’s a whole era of design,” Hupper recognized. Given that Chinese customers are now used to quick, exemplary aftercare services and delivery, it makes sense that netizens are seeking extra attention during the buying process too.

Rising Stars and Rising Numbers

For many designers, this showcase was a gateway for massive exposure, in particular for relatively unknown talents, and video was the perfect avenue to connect with new customers. A creative video by a young label, Fabric Porn, proved particularly popular on Tmall. The experience was set in a hazy abandoned house and recalled the New York underground music scene. It was during the livestream that founder Zhao Chenxi really excelled.

This is Fabric Porn’s DNA — contemporary China with an off-kilter twist. Fabric Porn’s collection featured traditional ‘90s Chinese elements, like the famous comedian Zhao Benshan, red Xi letters and a hat with the logo “Make China Lit Again” — a darkly humorous play on US President Trump’s slogan. This demonstrates the new-found China patriotism sentiment shared by many young millennials today.

Dazed China’s Kong continued that livestreaming started as people are craving to see celebrities’ personal life up close, and “it’s the personal aspect that draws people together. This also works for designers.”

“Not every designer has the ability to be charming in front of the camera or is ready for this kind of attention. It could backfire on-screen.”

This openness doesn’t work for all brands, however, and designers must have the X-factor to be successful. Increased accessibility to designers’ personal space can be a double-edged sword. “Not every designer has the ability to be charming in front of the camera or is ready for this kind of attention. It could backfire on-screen,” Kong added.

For other brands, the Tmall livestream format presented both a spike in exposure and in sales. The homegrown luxury player Icicle, for one, earned over 238,000 views within the two hours of its livestream; visitors as well as sales on its Tmall store increased by 100%. Icicle attributed the commercial success of its “see now, buy now” showcase to their choice of product — selected commercial lines were promoted over conceptual pieces. The average customer unit price exceeded about $563 (4,000 RMB).

The fashion conglomerate Zuczug, with over 100 stores and six fashion lines, suggested all their data doubled. In particular, the number of interactions between the audience and them increased significantly, reaching above 100,000. The live broadcast conversion rate for the brand was 12.8% and the number of completed transactions totaled 16.9%.

Hupper said that while attention from major media or A-list front row is still vital, they are no longer what drives the sales that sustain and grow companies. Babyghost has a standalone Tmall store, but this additional exposure gave the brand a boost in scale and accessibility.

The Shanghai-based co-founder was satisfied with the numbers and continued: “This was mostly for our most dedicated fan base — rather than press or especially buyers. It would be like inviting 3,000 of our clients to a private trunk show and in that respect it was a huge success.” Tmall reported the weekly lead-through transaction increased by more than 450%.

Where Do Fashion Weeks Go From Here?

Undoubtedly, this was a necessary virtual outlet for designers struggling to cope post COVID-19 and allowed designers to advance their understanding of 3D design and application and audience engagement. Even with the advances, it was clear that many designers still craved the physical.

Ffixxed Studios’ Pickering said, “I don’t think this will replace the fashion week, but I think something of this might continue on, as aside from livestreaming and video, we had an online showroom and video conference calls with buyers that worked well. We will also continue to carry on making the new digital assets that were introduced this season.”

Shushu/Tong Fall 2020 Lookbook. Image: Courtesy.

Shushu/Tong’s Lei was equally adamant that the offline shows are still necessary: “We will definitely go back to physical as you can’t compete with it. But we will definitely livestream our next show as well.”

While consumers still need to feel the fabrics or see the garments with their own eyes, according to Angel Chen, a more holistic combination of digital and physical could be a winning future combination. “We can’t rely completely on digital technology. I still believe that after the situation gets better, the show plus the likes of livestreaming, CG and VR Technology all together will make for a more finished outcome for the audience,” Chen concluded.

This online fashion week was executed under extreme, extenuating circumstances and was a swift response to an exceptional crisis. It has, however, democratized the industry’s most exclusive event, transforming it into a consumer-facing trial which resulted in increased views, sales and innovative branding exercises. It also challenged the necessity for the global travel and carbon footprint associated with fashion weeks.

Conversely, it raised many questions. For example, could this propel designers to move towards a direct to consumer sales model, eliminating wholesale and the need for retail buyers? Can this result in the celebritization of the fashion designer in China and further commercialize them as stars in their own right? As the fashion industry digests this imperfect but daring feat, it is clear that only China could have executed such a vast, dynamic demonstration of pushing fashion’s possibilities.





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When Will Hong Kong’s Luxury Retail Market Recover?


What Happened:

Hong Kong has impressed the world with its flattened COVID-19 curve, but the city’s freefalling retail sector is now under scrutiny. 

The government reported a record drop in retail sales this Tuesday, with a 44-percent fall during the February lockdown to $2.93 billion (22.7 billion HKD). And across different sectors of retail goods, luxury is the one that’s been hit hardest. The sales of jewelry, watches, clocks, and valuable gifts garnered 58.6 percent fewer sales this January and February when compared to the same period last year. Also, sales of medicines/cosmetics and wearing apparel were cut by 42.7 percent and 49.9 percent, respectively.

And local consumers don’t expect Hong Kong to recover soon. The recent Hong Kong consumer research survey by the global market research and consulting firm Ipsos, Hong Kong Consumer & COVID-19 Study, shows that people are split over when Hong Kong will recover. Among the 1,000 participants, approximately one-third thought recovery would occur in 2021, with 18 percent of those expecting a recovery in the second quarter of 2021.

Jing Take:

recover

Wary of hostile sentiments from Hong Kong locals, as well as continued travel restrictions, shoppers from China mainland might stay put for now. Photo: Shutterstock

COVID-19 has been a magnifying glass for existing problems, and since Hong Kong’s luxury sales were already flagging before the pandemic — largely due to social unrest — it’s now getting hit twice as hard. 

Current retail sales also reflect a bleak outlook for travel retail. With the lingering worry about hostile sentiments from Hong Kong locals, as well as continued travel restrictions, mainlanders might stay away from the city for quite some time. 

In comparison, mainland China’s total retail sales over the first two months of 2020 were down 20.5 percent, according to The National Bureau of Statistics. This was half the size of Hong Kong’s slump despite a national lockdown, and the mainland has shown early signs of recovery, including long lines at Chanel stores. The feeling here is that luxury brands should zero in on the mainland market for now because Hong Kong probably won’t rebound anytime soon.  

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.





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Sergio Rossi dies at 84 of COVID-19, his brand is expanding fast in China


Update published April 3, 2020:

Sergio Rossi, one of the industry’s most respected shoe designers, died this past Thursday at 84 after being hospitalized in Italy with COVID-19, according to WWD.

Having learned the trade from his father, Rossi founded his eponymous brand in 1968, which is now headed by Riccardo Sciutto. “Today everyone at Sergio Rossi joins me in remembering our dear Sergio, the inspiring founder of our dream,” Sciutto said through the brand’s social media. “His vision and approach will remain our guide in the growth of the brand and the business.” 

The luxury shoe brand has started targeting China’s millennials in recent years, as Jing Daily previously reported. Back in 2018, the brand inked a deal with K11 Art Mall’s owner Adrian Cheng’s brand management firm, Luxba Group, in a bid to relaunch in China. Sergio Rossi opened stores in Beijing, Shanghai, Hong Kong, and Chengdu after the partnership embarked, according to its official WeChat. 

Prada provides support in COVID-19 emergency. Photo: Prada.

Prada provides support for COVID-19 emergency. Photo: Courtesy of Prada.

Update published March 24, 2020:

COVID-19 has created an emergency medical supply shortage in many countries. But after periods of halted production, luxury houses are now starting to dedicate their factories to the production of essential medical goods in the fight against the deadly virus.

French luxury group LVMH was one of the first to announce that it would be making hand sanitizer in its fragrance and makeup factories, which normally churn out products for brands like Guerlain, Christian Dior, and Givenchy. Meanwhile, rival luxury group Kering ordered 3 million medical masks for French hospitals in need. Kering group brands, such as Balenciaga and Yves Saint Laurent, are even using their French studios to help produce the masks.

On March 18, Prada started producing 80,000 pairs of medical overalls and 110,000 masks for healthcare professionals following a request from the Tuscany Region. The production plan provides daily deliveries until April 6. With their supply chain and logistics departments being severely impacted, luxury brands have seen their sales take a big hit, and they’ve suspended orders or shut down stores in many countries around the world. But thanks to a recent recovery from the virus, many deliveries and orders have opened up again in China — a silver lining for many international businesses.

Local consumers have lined up outside the Chanel boutique in Shanghai IFC shopping mall. Photo: Weibo.

Local consumers have lined up outside the Chanel boutique in Shanghai IFC shopping mall. Photo: Weibo.

Update published March 20, 2020: 

As the rebound of China’s luxury market slowly begins, it’s the rest of the world that is now dealing with COVID-19’s extensive impact. In China, however, as social distancing measures continue to loosen up, more and more luxury stores are reopening their doors. The normalizing of offline businesses, growing in-store footprints, and consumer’s budding optimistic sentiment, are solid indicators of the awakening of China’s retail sector. 

Meanwhile, international travel restrictions and cancelled flights still exist worldwide, the ongoing halted outbound tourism, however, as well as China’s import tariff, which was lowered this year make the recovery of domestic luxury consumption more promising. 

Elsewhere, homegrown creatives in the fashion industry are adapting to the new normal and resuming their businesses. Chinese designers, both China-based and abroad, have been able to resume production either in-house or in reopened local factories to catch up on back orders from stockists and to prepare for the upcoming fall collections. Local showrooms such as Tube Showroom and DFO Showroom are connecting with buyers through live-streaming or online order platforms, with physical showrooms expected to be set up at the end of March or April, as WWD reported.  

Update published March 19, 2020:

Will this massive production halt in Italy stop brands from being able to sell to a now-recovering-China market to help offset their losses? Photo: Shutterstock.com

Will this massive production halt in Italy stop brands from being able to sell to a now-recovering-China market to help offset their losses? Photo: Shutterstock.com 

The prestigious “Made in Italy” label is the latest victim of the global COVID-19 pandemic, as many Western luxury brands’ — from Chanel to Hermès to Gucci — are shutting down factories in France, Switzerland, and Italy for the next several weeks.

“Chanel took the decision, in accordance with the latest government instructions, to close the entirety of its production sites in France, Italy, and Switzerland [watchmaking], as well as its haute couture, ready-to-wear, métiers d’art and jewelry,” the company said, noting that some distribution sites are still active and maintained by minimal staff.

Moreover, it’s been reported that Hermès has already closed down 42 production bases until March 30th, and Gucci has closed six factories in Italy’s Tuscany region and all of its stores in Italy. LVMH also stated that they are doing their best to stay in production, with one of its perfume factories now producing hand sanitizer since earlier this week.

As the COVID-19 virus continues to disrupt the luxury industry in unprecedented ways, orders from China for Gucci, Prada, and Salvatore Ferragamo products have significantly declined, a couple of suppliers told Reuters recently. Given this, will this massive production halt in Italy stop brands from being able to sell to a now-recovering-China market to help offset their losses? We’ll keep a close watch on how the situation develops.

Due to the worsening COVID-19 global pandemic, European luxury companies’ stock prices hit their lowest point in over a year this week. Photo: shutterstock.com

Update published March 17, 2020: 

As global stock markets tumble due to the worsening COVID-19 global pandemic, major luxury companies’ stock prices have slashed as much as 48% of their market value compared to their highest point last year. LVMH and Kering, which are both listed on Euronext Paris, were at 297.6 and 377.2 as the market closed yesterday — down 32% and 37% compared with their respective peak prices of 439.05 and 605.1 in January. Moreover, Richemont (SIX Swiss Exchange), Burberry (London Stock Exchange) and Prada’s (The Stock Exchange of Hong Kong Limited) stock prices have all shed over 40% compared to their peak prices in the last 12 months. 

The tide has turned this week, as confirmed cases of COVID-19 outside of China have surpassed new ones within China. Moreover, now that China is on the road to recovery, growing concerns over luxury companies’ store closures and supply chains across the globe are becoming a reality. And as the next round of earnings calls are approaching for LVMH and Kering in April, all eyes will be on whether luxury CEOs have a global solution at hand. 

canceling

Brands are canceling their resort/cruise shows in droves. Photo: Shutterstock

Update published March 12, 2020: 

As the COVID-19 pandemic unravels in 125 countries, more and more luxury brands are expected to cancel or postpone the next milestone on their calendars: their resort/cruise collection shows. Such a move so close to the shows themselves will certainly not help a brand’s bottom line, but it indicates the extent of precaution brands are willing to take during the ongoing crisis.

A selective list of disrupted cruise/resort shows in April and May. Chart: Yaling Jiang

Most recently, Max Mara joined the string of brands that either postponed or canceled their resort/cruise shows, and halted its 2021 resort wear show in Russia’s St. Petersburg, according to WWD. This has put Chanel and Dior* under the spotlight, as their resort/cruise shows are still expected to go on in locked-down Italy. When is it time to make the call? And if the show needs to be postponed, until when? Given the pandemic’s lasting effects, brands might have already started thinking about their takeaways from dealing with China’s lockdown during the past fashion weeks, and turn to livestreaming as the last resort. 

*Dior has decided to postpone its cruise show indefinitely as of March 16, WWD reported.

luxury

As the COVID-19 virus spreads to 108 countries on March 9, global markets tumbled. Photo: Shutterstock

Update published March 9, 2020: 

The COVID-19 virus is non-discriminatory regarding territories, as Jing Daily sees in terms of infected cases and market reactions. By market close on Monday, all three major indexes in the US were all falling beyond 7%, while the Dow had its worst single-day drop since 2008, according to the WSJ. Meanwhile, China’s Hang Seng Index sunk 1,106 points, or 4.23%, to 25,040. And the Stoxx Europe 600 shed over 7% to 339.

Thanks to a stringent quarantine policy from the central government, China seems to have the virus under control, with 42% of almost 140,000 reportedly infected cases being cured. However, the battle for the other 108 infected countries has just begun, as Italy recently announced to lock down the entire country, and many US companies like Amazon and Facebook encouraging staff to work from home. As the Chinese society and businesses limp back to normality after over a month-long lockdown, can Western luxury brands translate what has worked in China — from cloud shows to livestreaming to prepare for a “worst-case scenario,” as investor Ray Dalio said, while the COVID-19 epidemic takes over the world?

Companies want to give smarter when it comes to fighting the coronavirus, and Dolce & Gabbana is doing just that by funding Italy’s top university scientists. Photo: Shutterstock

Update published March 5, 2020: 

Dolce & Gabbana is cooperating with the Italian private college Humanitas University to support a study into immune system responses to the deadly COVID-19 virus. The research objective is to lay a foundation for developing diagnostic and appropriate treatment.

The donation will support a study coordinated by Professor Alberto Mantovani, the Scientific Director of Humanitas and Emeritus Professor of Humanitas University, along with Prof. Cecilia Garlanda of Humanitas University and Professors Elisa Vicenzi and Massimo Clementi from the San Raffaele Vita-Salute University. This is notable because Professor Vicenzi and Clementi were “the first in Italy to isolate the pathogen responsible for SARS.”

This project is not the first collaboration between the Italian fashion house and Humanitas University. In fact, Dolce & Gabbana awards yearly grants for students of the MedTec School program in Medicine through Humanitas University and Politecnico di Milano, another Italian university.

“We felt we had to do something to fight this devastating virus, which started in China but is threatening all mankind,” said Domenico Dolce and Stefano Gabbana in a statement. “In these cases, it is important to make the right choice. This is why we thought Humanitas University would be the ideal partner, whose excellence and humanity make it a special entity, with which we have already cooperated on a scholarship project.”

Delvaux store in Rome. Photo: Shutterstock

Update published March 4, 2020: 

As the COVID-19 crisis continues, luxury brands are looking for digital solutions, including e-commerce and “see now, buy now” live-streaming, to offset revenue loss caused by the virus. Last week, for example, Prada joined Tmall, Alibaba’s business to consumer channel. This week, the Belgium brand Delvaux launched on JD.com, it’s first e-commerce channel in China. And the prestigious French label Lanvin, which is under the Chinese group Fosun, also joined forces with the high-end e-commerce platform Secoo, live-streaming their Fall/Winter 2020 runway show with a popular “see now, buy now” function. As Chinese consumer spending sentiment is still slowly recovering, to what extent this will help brands with their sales is unknown, but it’s certainly a strategic move for many brands.

Armani

Giorgio Armani poses with Chinese models at his Fall 2020 show. Photo: Courtesy of Giorgio Armani

Update published February 24, 2020: 

As of Monday, with over 200 confirmed Covid-19 cases and five dead, Italy has stepped up measures to contain the virus by placing a dozen towns in northern Italy, including the regions of Lombardy and Veneto — home to Milan and Venice — on lockdown. This had a profound effect on Milan Fashion Week. In order to ease health concerns of attendees and stop the possible spread of the virus, a few brands, including Giorgio Armani and Laura Biagiotti, decided to livestream their runway shows. How this will affect Paris Fashion Week, which starts today, is still unknown. 

Update published February 18, 2020: 

Chanel announced today that it will postpone showing a replica of its Paris – 31 rue Cambon 2019/20 Métiers d’art collection in May in Beijing due to the Covid-19 crisis. The collection, which debuted in Paris in December, was inspired by the studio of founder Coco Chanel. The decision to prioritize “the health and well-being of its teams and clients,” however, was in line with the brand’s recent $1.4 million (10 million RMB) donation to support China and its citizens, as reported by BoF. While the restage strategy has been regarded as a fundamental initiative to engage Chinese consumers, this isn’t the first time the brand has had to reschedule an event in China due to unexpected challenges. Last year, they had to cancel their Hong Kong cruise show because of ongoing protests. Similar postponements have hit other luxury brands, including Prada, which recently put on hold its upcoming Prada Resort show in Japan for May 21. New dates for both events are yet available.

Update published February 12, 2020: 

Burberry, the British heritage label, recently issued an urgent warning about the material effects of the coronavirus on the luxury market, and updated its own outlook for fiscal year 2020 as well. The announcement scrapped their positive sales forecast to a low single digit percentage increase envisioned in the brand’s third quarter trading update released last month. Moreover, they did not discuss any updates on either their previously scheduled Shanghai runway show in April or their first social retail store in partnership with Tencent. Along with their warning, however, Burberry only touched upon the “mitigating actions” they are taking to compensate for losses due to the coronavirus, but did not discuss further details. 

Update published January 24, 2020:

As concerns about the coronavirus escalate, many Chinese tech companies are joining in to help. For example, Tmall, JD.com, and others have blocked vendors from jacking up prices on facial masks and other health and cleaning supplies. Also, in responding to the Wuhan city lockdown announced recently, cross-border e-commerce BorderX Lab has prepared plans to deliver supplies to Chinese consumers threatened by the coronavirus. And to minimize customers’ costs, several airlines, as well as China’s state railway company and online travel agencies, are offering refunds for trips related to Wuhan.

The timing of the outbreak during Chinese New Year, a time when Chinese travelers on the mainland and overseas make their way back home, marking the “world’s largest human migration,” only added to the spread of the virus. A total of seven cases have been confirmed outside of China, including Thailand, Japan, South Korea, and the US, updated by financial media Caixin. On Thursday, January 23, WHO clarified that the virus is not yet a global emergency. However, it’s likely to continue impacting not only travel and duty-free industries, which typically expect an increase in sales during the holiday, but also luxury retailers overseas who should brace themselves for potential hits.

Update published January 23, 2020:

Since Tuesday, when Jing Daily reported on the decline of Western luxury groups’ stock prices due to the coronavirus, prices have continued to spiral downward as the virus continues to spread in mainland China and beyond its shores. LVMH and Kering’s stock prices, which shed 25.2 euros and 36.8 euros respectively as of the close of the European stock market today, reached a 30-day low. The question is: how low will they go?

The Chinese public’s growing concern that any official action by the Chinese government, which states as of Wednesday, January 22, that there are 571 reported cases of the coronavirus and 17 deaths, has been affected by delays and censorship on the local level.

Meanwhile, the government has put an unprecedented quarantine on Wuhan, the epicenter of the coronavirus, with all public transportation, including airports and trains, that keeps the massive city of 11 million people running to a halt. And now, with four more nearby cities announcing similar measures, the concern is how to stop the global spread of the coronavirus and what lingering damage it may cause.

Original article published January 21, 2020:

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

What happened:

China’s new strain of the coronavirus, which has already spread to at least three other countries and could spread further during the Chinese New Year holiday travel rush, has sent European luxury stocks tumbling, including the likes of LVMH, Kering, Richemont, and Burberry. Official reports say that coronavirus, a respiratory virus that causes pneumonia-like symptoms and that can be passed in between humans, has already killed four people and infected nearly 291 in China, according to state media China Daily on Tuesday. But the actual outbreak might prove worse.

An estimate by scientists from University of Hong Kong said today that nearly 1,700 people in Wuhan, China — where the virus  outbreak started — may have also been infected. As China’s 40-day Spring Festival travel season just kicked off, health experts are also discouraging people to travel to Wuhan, though major cities like Beijing and Shanghai already have confirmed cases. Given the increasing concern of a global outbreak, stocks of European luxury brands that rely heavily on the Chinese market have slumped as a result. Compared to last Friday, LVMH and Burberry’s stock fell 3%, while Kering lost over 4%, and Richemont’s declined almost 5.5%.

The Jing Take:

Luxury veterans might still remember how the SARS outbreak in China left the industry in despair in the early 2000s, leading to billions in losses and cost the Chinese GDP growth by nearly 1%. At the moment, however, it’s difficult to predict how much economic damage a potential coronavirus outbreak will be for China, as well as the global economy. For Western luxury brands, there is not much they can do at this point other than paying close attention to how their consumers are reacting and pray that the Chinese government has potential epidemic under control, as it claimed this Monday. Time will tell.





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Which Luxury Campaigns Stood Out in China This Week?


The Social Edition is a weekly special-focus Jing Daily newsletter, which deep dives into luxury initiatives in China’s social media landscape. Every week, we highlight brand campaigns distributed on Chinese digital platforms — WeChat, Weibo, Tmall, Douyin, and beyond.

Our coverage spotlights global luxury brands, global beauty brands, and local Chinese brands. The latter gives insight into some of China’s most successful campaigns, which often come from local players, and are outside of the beauty and fashion space. In addition, we deliver need-to-know news, updates, and best practices on navigating social media platforms in China within the luxury space.

The below is an excerpt from The Social Edition newsletter. For weekly coverage, subscribe to the full newsletter here. In this week’s edition, we looked at three campaigns: from booming local intimates brand NEIWAI to MAC’s innovative livestream activation and Fendi Spring 2020.

“BODY TALK” VOLUME 1

BRAND Neiwai  CATEGORY Intimates
PLATFORMS Weibo, WeChat, Tmall
MEDIUM Short Video

OVERVIEW
“Body Talk” is the latest installment in the short-video series campaign “No Body Is Nobody” by the Chinese intimates brand NEIWAI. Continuing the label’s dedication to encouraging body positivity, the first volume of “Body Talk” features three females sharing their personal journeys as plus-size women. The nine-minute video was launched in conjunction with NEIWAI’s “body diversity” slogan T-shirts. The campaign and T-shirts resonate with a growing community of Chinese females who are joining the body positive movement.

NETIZEN REACTION 
The video campaign has received over 8,800 and 13,000 views on Weibo and WeChat respectively at the time of publishing. The open discussion, “Have you ever felt anxious about being overweight?” on WeChat has gained 144 likes and attracted users to share their personal stories.

VERDICT
Insteading of casting celebrities with “idealized” body shapes, NEIWAI invited everyday females to share intimate narratives. The choice adds a level of relatability to NEIWAI’s marketing, which largely appeals to the underserved plus-sized market in China. As a leading player promoting body positivity in China, the brand presents a clear understanding of the sophisticated millennial and Gen Z woman who holds brands to high expectations. The campaign successfully generated organic discussion on Chinese social media, thanks to the emotional connection and trust created between the brand and consumers.

THE MATTE RENAISSANCE

BRAND MAC Cosmetics  CATEGORY Beauty
PLATFORMS WeChat, Weibo, Tmall
MEDIUM Livestream, Short Video

OVERVIEW
Featuring MAC Cosmetics’ signature matte finish products, this Spring 2020 campaign went live alongside a makeup reality show competition on Taobao Live — the first of its kind. In this innovative model, makeup experts showcased the brand’s foundation, eye palettes, and lipsticks through applying them on models and interactive tutorials with audiences. All of the products in the livestream are available for purchase on MAC’s Tmall flagship store; users need only click through on-screen links to access the product.

FEATURED TALENT
Lay Zhang (48.8M Followers) | Li Jiaqi (13.1M)  | Li Wenhan (10.7M) | Zhao Lusi (8.7M)

NETIZEN REACTION 
The campaign has seen tremendous success on social media platforms. The Weibo hashtag “The Matte Renaissance” received 400 million views and the livestreams on Taobao amounted to 301,113 views. Users posted under the Weibo hashtag to share what they purchased during the live show as a way of supporting their idols.

VERDICT
The campaign’s live battle segment added a new level of playfulness to the standard livestream format that merely promotes products, while the “see now, buy now” model effectively drove product sales. Besides casting top-tier influencers and celebrities on the cloud, MAC collaborated with micro-influencers specializing in makeup. Their strong influence among the makeup community cannot be underestimated. Overall, the campaign struck the right note, leaning on its creative format and a dynamic mix of influencers.

FENDI SPRING 2020

BRAND Fendi  CATEGORY Luxury
PLATFORMS WeChat
MEDIUM Imagery, Mini Program

OVERVIEW
To promote its Spring 2020 collection, Fendi has leveraged a range of well-designed posts on WeChat. Its most recent March 26 post on WeChat includes a mix of content with a menswear focus, bringing together a range of assets from magazine shoots in addition to the brand’s own imagery. Xu WeiZhou, the spokesperson for Fendi’s Peekabo handbag, is front and center, but the post also features a wide range of influencers, models, and idols. The post includes in-article product links that connect directly to the brand’s website. Elsewhere, Fendi’s current Mini Program offers an in-app shopping entry point for users. However, there is a disconnect between Fendi’s Mini Program and the content being shared through its individual WeChat posts.

FEATURED TALENT
Xu Weizhou (11.7M Followers) | Qiao Xin (7.6M) | @Fil小白 (4.9M) | Xu Guanghan (3.3M)

NETIZEN REACTION
Fendi’s Spring 2020 promotions have been well-received by WeChat users. They spoke highly of the selection of Xu Weizhou, the spokesman for Fendi’s Peekaboo bag, adding that he stands for the brand’s DNA. The latest WeChat post received over 14,000 views and high engagement.

VERDICT
While Fendi’s Spring 2020 WeChat promotion is checking all the right boxes, these boxes have become standard for most luxury brands. The activation has failed to push digital social limits or to go above and beyond to engage shoppers. Given the current COVID-19 climate, brands have had to walk a fine line and avoid over-promotion or seeming tone deaf. But as the path to normalcy returns, brands have an opportunity to re-engage. It is also important that brands keep in mind integration between their WeChat posts and WeChat Mini Program. In Fendi’s case, its individual WeChat posts are all linking out to the brand’s website, instead of its Mini Program. Some variation is beneficial, and brands can aim to have purchase entry points for both its Mini Program and website. However, a closed content-to-purchase WeChat loop should always be present.

This is an excerpt from The Social Edition newsletter. For full weekly coverage, subscribe to the newsletter here.





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Could Post-COVID-19 National Pride Push US Brands Out?


China might be a “nation shaped in consumerism,” but that doesn’t necessarily mean Western-style consumerism. In fact, the country’s cultural and social changes have led to a new context where global brands are negligible, and domestic players are threatening their supremacy. But make no mistake about it: The rise of local brands is not a phenomenon that happened overnight.

Inkstone points to research by Bain & Co. to show how, since 2016, foreign brands have grown their collective sales by 9 percent, while domestic brands grew by 15 percent during that time. Meanwhile, according to a report released by a think tank with the China Economic Information Service based on data from e-commerce platform JD.com, “the increase of total online orders of Chinese products was 8 percent higher than that of foreign brand products in 2018.”

In 2018, Forbes also highlighted how Chinese consumers had an increased affinity for homegrown luxury brands. “What remains somewhat under the radar is China’s growing clout as a luxury brand’s incubator, not merely a country of luxury consumers,” said Christophe Caïs, a Forbes Councils member. “With Chinese buyers embracing homegrown brands, the big names of Western luxury might no longer carry the same weight only a few years from now.”

Today, Chinese luxury consumers continue to snub international brands, and they’re becoming increasingly nationalistic. The ongoing trade war, accusations of intellectual property theft, and demands that the U.N. recognize China as the official origin of COVID-19 have made the US-China relationship highly dysfunctional. Consequently, it’s not surprising that Chinese consumers are choosing patriotic purchases.

Sinophobia has also increased in the US, and Chinese consumers feel like they’ve become America’s scapegoats, getting blamed for an inevitable health crisis that they didn’t provoke. But grassroots nationalism is changing the conversation, and young, politically-engaged consumers are embracing domestic brands in response to current global events.

Not long ago, Chinese luxury buyers turned to domestic brands because they wanted to support local success stories. Now, they’ve added a moral element to their purchasing power. Promoting “Made in China” has become a personal choice that communicates a pro-identity stance. We saw this shift in the backlash against global brands that disrespected China’s identity or national sovereignty with boycotts on Dolce & Gabbana, Versace, Coach, and the NBA.

Let’s take a look at the reasons why even more consumers will soon by buying “Made in China” products rather than goods from global brands:

Domestic brands know the taste preferences of local consumers

Let’s face it: Local brands can better determine what makes Chinese consumers tick, and they also have a better understanding of the local market.

Global brands arrive in China with standardized marketing campaigns, eager to win over customers’ hearts and minds. But instead of finding success, they often go from one blunder to another. Disappointing translations, in particular, are a common recurrence. For instance, Mercedes-Benz tried a rebranding in China under the name “Bensi.” But, unfortunately, the word sounds like “rush to die” in the local language — a thought no one wants to be associated with their sports car.

Meanwhile, Business Insider reports that Nike released a special edition trainer that had the character “Fa” written on the left shoe and “Fu” on the right shoe. Separated, “Fa” means “Getting rich,” and “Fu” translates to “Fortune arrives.” But if you put the characters together, it reads “getting fat.”

As you can see, a single error can irrevocably damage a company’s reputation in China. Nevertheless, domestic players can avoid these pitfalls since they have built-in cultural sensitivity and much better market awareness.

The ability of small consumer brands to hyper-target local consumers allows them to move quickly and respond to consumer needs in a more timely fashion. For the buyer, this creates greater engagement and a more emotional connection. On the other hand, global brands tend to have a more bureaucratic and opaque style, so they are slower to react. This makes their messages feel impersonal and lackluster.

Local brands are reasonably priced and have good quality

Long gone are the days when “Made in China” was “limited to low-level, low-tech, and cheap goods.” Through technological development, design innovation, and R & D, China has been upgrading its domestic products, giving them a winning edge in domestic sales. Consumers have responded to this change with enthusiasm, and both millennials and Gen Zers are expressing patriotism and pride via their acquisitions.

Annie Hou, vice-president of strategy at the marketing agency Ogilvy in Beijing, told the Financial Times that, in the minds of Chinese millennials, “domestic brands are no longer inferior to global brands.” But apart from these qualitative factors, price is also a consideration driving demand for locally made products. Domestic players can generate superior margins through lower price positioning, and since these brands can reduce costs, they can also emphasize pricing strategies. This game plan won’t work with global luxury retailers that refuse to consider price cuts or discounts.

The playing field will never be level, but the players and rules are constantly changing. In the global arena, Western brands and multinationals are still favored, but in China, these groups face serious credibility issues. Thus, domestic brands are mastering the rapidly changing environment and winning in China’s market.

Domestic brands can sell “patriotism”

According to a survey conducted by the business advisory firm Brunswick Corporation, 56 percent of Chinese respondents said they would avoid buying American products to show their support for China. Meanwhile, a survey by Credit Suisse shows that over 90 percent of Chinese consumers between the ages of 18-29 are looking to buy electrical home appliances from local brands.

Rising patriotism and hostility toward the West are proving lucrative for local businesses, and some intuitive designers and domestic brands have been benefiting from the trend. For instance, the Chinese sportswear brand Li-Ning saw an incredible jump in its stock price in 2019, which isn’t surprising considering the patriotic designs promoted by the brand.

But, at the same time, many Chinese consumers see domestic technology companies like Huawei as enhanced versions of Western models. The South China Morning Post says that in 2019, when President Donald Trump signed the executive order on telecommunication security targeting Huawei, comments like “support Huawei” and “hang in there” became popular on Weibo.

On the whole, the good times in China seem to be over for American brands, and it’s doubtful that the Trump administration will amend its economic stance there. Meanwhile, US brands should prepare to pay a price for President Trump’s remarks about the country. In the end, it’s up to business and community leaders to educate the American public about the damage that comes from using words like “Wuhan virus.”

Two words can alienate a market of 1.4 billion consumers and cost the American economy billions of dollars a year in taxes and jobs. Or, as David Frum in The Atlantic put it: “Trump’s ‘I order, you salute’ model of leadership will end at best in failure and at worst in defeat.”





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China Ad and PR Leaders


This post originally appeared on Campaign Asia, our content partner. 

About a month ago, the Chinese market was going through its darkest moments after the outbreak of COVID-19. Today, the situation is gradually coming under control in China, giving industry professionals a chance to look back and evaluate what they learned. Meanwhile, the dire conditions China faced earlier are now impacting countries around the world. Campaign China interviewed CEOs, presidents and senior managers in advertising and public relations agencies in China to reveal what they learned that might benefit their counterparts around the world.

Heidi Zhang, chief strategy officer at Publicis Communications China, said the most profound realization she got from the pandemic is not to act blindly but instead be cool-headed and look for quality changes during a crisis.

“If one just holds on and does nothing, waiting for the pandemic to pass and things to return to normal, one will only come to realize that both the old norm and the new opportunities are gone in the end.” —Suzzane Zhang, McCann

One must think carefully about potential countermeasures before taking any action, Zhang said. Find out what the market needs and what the brand value represents. The annual plan can be adjusted by phases. “And don’t panic,” she said. In larger, holding-group companies, Zhang said frankly, what is more important is the sharing and optimization of internal resources. “This is especially obvious under extraordinary circumstances,” she said. A pandemic represents a great opportunity for companies to rethink transformation and adjustments, as well as the company’s business model and values, she said. During such trying times, it is essential to ensure team members are calm and stable, share the same beliefs, and shoulder the risks together through resource integration, thereby creating maximum value for customers, she added.

“Never underestimate the flexibility of your staff and your customers.” —Nic Camacho, AKQA China

PR companies faced similar issues. Lydia Lee, president of Weber Shandwick China, said that PR companies in China proved quite flexible, because their staff members are mostly multi-skilled, which facilitates dividing and rearranging responsibilities in a time of crisis. She believes that PR companies in other markets might be at a disavantage on this score because their talent is more specialised.

Since the outbreak, the marketing industry has experienced many different pains—shrinking business, budget cuts, challenges in annual planning—but at the same time, new business opportunities and growth also exist.

According to the interviewed companies, challenges exist in areas such as operations, revenue and management, affecting the allocation of internal resources directly. “Without cutting salary or staff, the only way out will be resources adjustment,” an interviewee said.

“The pandemic represents tremendous opportunities for PR companies, because it makes the brands realize the importance of professional external communication, and has created growth opportunities.” —Prince Zhang, Ketchum

Most interviewees indicated that advertising agencies that might be most affected include conventional advertising companies, agencies with little flexibility and diversification, agencies lagging behind in digitisation and integration, and those reliant on customers from a single industry, especially if that industry is also facing market challenges. With the increasing demand for higher conversions from customers on e-commerce platforms, the services of performance marketing agencies will be in high demand.

“Never underestimate the flexibility of your staff and your customers,” advised Nic Camacho, client partner at AKQA China. During the pandemic, agencies should look for unique ways to react to challenges and resolve thorny issues. For example, he told Campaign China, his agency had to scramble to adjust a job for Nike that was set for filming on location in various parts of China. In the end, the agency decided to use video conferencing to guide local talents who were under quarantine to create content from home. The first “remote filming” project turned out to be a success, he said.

PR leaders told Campaign that offline activities dropped as a result of the pandemic while online communication increased. At the same time, crisis-management business also grew during the first quarter. During the pandemic, the demand for crisis management (including cancellation of activities and exhibitions) and staff communication increased, bringing in new customers and new business. However, the impact of the pandemic on companies relying mainly on offline activities had been more significant, and companies that had waited passively for customers’ briefs also suffered.

“I believe that this has given China’s advertising industry an opportunity to upgrade and transform their businesses. That is, it has forced the advertising industry to move upstream along the information chain.” —Karl Wu, Havas Group

“The pandemic represents tremendous opportunities for PR companies, because it makes the brands realize the importance of professional external communication, and has created growth opportunities,” said Prince Zhang, CEO for Greater China at Ketchum. During the pandemic, it is crucial that brands keep their voice in the market and continue to communicate with consumers. On the other hand, brands also need to grasp the opportunity to convert and upgrade their channels.

“Challenges arising from incidents are part of life,” he added. “Companies should be aware of crisis and be prepared at any time. Going forward, the public relations industry should increase their investments in areas such as digital channels, data and technologies, as well as marketing automation, all directly related to a company’s survival in the future.”

The pandemic has given advertising agencies an opportunity to increase the value they provide, according to Karl Wu, co-chairman and CEO of Havas Group Greater China. “I believe that this has given China’s advertising industry an opportunity to upgrade and transform their businesses. That is, it has forced the advertising industry to move upstream along the information chain.” Accepting customers’ project requirements passively and executing them perfectly is no longer sufficient. Instead, companies need to help customers analyze the market environment and opportunities.

Suzzane Zhang, head of planning at McCann China, said her most important lesson from the pandemic is to “react promptly and prepare early”. She said that her company started preparing toolkits focusing on the pandemic and developing short- to long-term countermeasures for brands at a very early stage.

“We noticed that internet companies like Alibaba successfully seized the opportunity from the pandemic and created tremendous value for the brand,” she said. “If one just holds on and does nothing, waiting for the pandemic to pass and things to return to normal, one will only come to realize that both the old norm and the new opportunities are gone in the end.”

Talking about the impact of the pandemic on the public relations industry, Weber Shandwick’s Lee said that a pandemic usually leads to “rational consumption”. Customers will adjust and cut their budgets and want services that offer good value for their money. Therefore, PR companies that have a good reputation or offer cheap services will become more popular. However, Lee sincerely hopes that brands will respect PR companies as partners instead of “downstream manufacturers”. “They should consider PR companies as an investment and not a cost center. Focusing on price alone will ultimately cost PR companies their talents,” she said.





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