Can Singapore Replace Hong Kong As Asia’s Top Luxury Destination?


Following Beijing’s newly proposed national security law, the Guardian dramatically announced that this would be “the end of Hong Kong.” It might seem like an overreaction, but reality shows that Hong Kong has been sinking into chaos since March of 2019. Anti-government protests and COVID-19 have kept wealthy mainland Chinese tourists and investors away from the Special Administrative Region for over a year, and these months of turmoil have naturally come with a high economic cost.

The Hong Kong Tourism Board announced the city’s visitor arrivals fell by a whopping 98.6 percent year-on-year during March, while CNN said Hong Kong’s economy shrank 1.2 percent, and its GDP shrank 2.9 percent in the fourth quarter of 2019.

Retail has been hit particularly hard, with sales falling by 42 percent in March compared to a year ago. Furthermore, the South China Morning Post highlights how consumer spending registered a record drop, falling to $2.9 billion (22.7 billion HKD). And according to The Hong Kong Retail Management Association (HKRMA), about 25 percent of retail stores are expected to close by the end of 2020.

Bearing this dramatic situation in mind, investors have started thinking about other financial and business hubs in the region that could potentially replace Hong Kong, and Singapore, which is a top regional luxury destination, is a strong contender.

With an economic freedom score of 89.4, Singapore has been the world’s freest economy thus far in 2020. Hong Kong came in second with a freedom score of 89.1.

Several investors are more optimistic about Singapore’s rebound than Hong Kong’s, and some data encourages that opinion. For example, a survey conducted by Comptify Analytics shows that during the Covid-19 crisis, twice as many Hong Kong employers laid off staffers than their Singaporean peers.

“Singapore is tending to apply less ‘destructive measures’ including furlough and redundancy to employment when it comes to cost-saving at this stage,” said Vincent Fung, managing consultant for Comptify Analytics to the South China Morning Post. This suggests some “cautious optimism about an economic rebound for the Singapore market.”

Retailers and executives have valid reasons to consider moving to Singapore, but there’s a long road ahead before the Asian Tiger becomes “the new Hong Kong.”

Westerners tend to identify the two thriving gateways to Asia as twins, but they are distinctive markets that cater to separate segments. Singapore is a local economic leader, and Hong Kong is an “extension” of China. Oversimplified, global businesses that want a strong footprint in China must be present in Hong Kong.

Let’s take a look at some reasons why Singapore won’t replace Hong Kong as a financial hub in the near future:

Economic challenges

Singapore’s GDP grew by a modest 0.7 percent in 2019, compared to 3.1 percent over 2018 — and the figures for 2020 aren’t encouraging. In fact, greater market deceleration is expected later this year. Singapore’s Ministry of Trade and Industry said in a statement that the Singapore economy is expected to shrink by between 1 and 4 percent across 2020.

The COVID-19 epidemic left a strong mark on Singapore’s economy, and analysts expect home prices to fall by as much as 3 percent during 2020. Moreover, the marine, offshore engineering, tourism, retail, and aviation industries have struggled to cope with the travel restrictions, and recent forecasts show that this island city-state is headed into its “worst-ever recession in nearly two decades.” According to the South China Morning Post, the crisis could prompt Prime Minister, Lee Hsien Loong, to call a general election. In short, the economic and political consequences of the pandemic have been severe.

The ripple effect

The idea that Singapore would greatly benefit from chaos in Hong Kong is also unrealistic. The two cities are major trading partners, so disruptions in Hong Kong also hurt Singapore.

The Ministry of Foreign Affairs of Singapore states that the two Asian power players have strong economic ties. In 2018, Hong Kong was Singapore’s 5th largest trading partner, with total bilateral trade amounting to $50 billion (70.6 billion SGD). It’s also the city’s fourth-largest cumulative investment destination.

Wenda Ma, a senior economist at the Hong Kong Trade Development Council, said in a 2015 report that the two regional powers have many similarities. “Both are small, open economies with no natural resources, but have developed into international trade and services centers in Asia,” Ma wrote. “From a regional development perspective, the two economies are nodes connecting the hinterlands of mainland China and Asian countries, which are set to strengthen economic ties and integration.”

Geolocation

The dependence of the luxury industry on the Chinese consumers is well documented, so Hong Kong’s proximity to the mainland gives it a winning edge over other regional cities. The close business links between Hong Kong and Beijing makes the city the ideal location for enterprises that want to do business with China or invest in mainland companies while still maintaining legal and entrepreneurial flexibility.

From a luxury retail perspective, businesses need to be close to Chinese consumers, and Hong Kong offers this proximity. Indeed, mainland luxury shoppers are currently avoiding Hong Kong and record-low tourist figures have been reported, but there’s no guarantee wealthy Chinese will flock to Singapore. And WWD reports that Tokyo, Seoul, and Singapore are all battling for these affluent Chinese shoppers.

Assuming that Singapore can fight off highly developed luxury hubs like Tokyo, Macao, or Seoul is arrogant. And so far, there’s no evidence of this direction.

Size matters

The Lion City is not only geographically smaller than Hong Kong, but its luxury industry is also smaller, less relevant, and not as glamorous.

Singapore might have the scintillating Esplanade Mall, The Shoppes at Marina Bay Sands, and Louis Vuitton’s floating Island Maison, but Hong Kong takes luxury to a different level. From its state-of-the-art, cutting edge malls to the chicest hotels and most lavish experiences, Hong Kong does extravagance with a nonchalance that few places in the world can pull off.

Singapore’s luxury economy is still in its preliminary phase, developing at an incredible speed yet still evolving. There’s not a strong, independent retail scene like there is in Tokyo or Seoul — cities where shoppers can choose between established European names like Prada or Gucci and local, avant-garde designers. The small shops on Harajuku are as popular as those in Ginza, which is what makes Tokyo a cool luxury destination. Singapore doesn’t have that edge yet.

Singapore’s future looks bright, despite some setbacks. But, Hong Kong’s struggle isn’t a real opportunity for the Lion City, and it won’t replace Hong Kong as the top luxury hub in the region in the near future. We assume that Macao, Guangzhou, and Shenzhen will grow in importance, and Tokyo, Seoul, Kuala Lumpur, Bangkok, and Singapore will continue to exercise authority as regional shopping destinations. All these cities are equally important, but none will replace Hong Kong anytime soon.





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Should Luxury Brands be Worried About Revenge Saving?


Liu Ting is a post-90 consumer who works at a boutique brand consultancy company in Shenzhen. The unexpected outbreak of COVID-19 forced her company to lay off half of the staff; fortunately her clients stayed but in financial terms, the experience left her in an anxious state of mind.

Ting is now making changes to how she spends her money: she is putting away part of her salary to a savings account just in case of a “lay off.” As a self-proclaimed bag-aholic, instead of buying favoured items from go-to shopping destinations, has instead is using the second-hand platform Idle Fish where she hunts for used luxury bags in nice condition.

Liu Ting is not the only one who has learned to tighten her belt; COVID-19 is a wake up call to a lot of young generations to shift from their free-spending lifestyle. Known as the debt generation, they have little savings and the unexpected disaster has taken a toll and they have come to the reality of saving. According to data provided by the Central Bank, national deposits increased by 6.47 trillion yuan in the first quarter of 2020, an increase of 400 billion yuan year-on-year.

An important demographic for luxury brands, will this generation’s saving behavior shift negatively impact the greater luxury industry? And if so, to what degree, and will it last long enough to alarm brands?

What Fuels Revenge Spending?

Much as reported on the revenge shopping scene in China which is believed to offset brands’ losses – at least temporarily. Financial earnings comforting stakeholders and long queues outside of luxury mall stores have also evidenced the trend.

However, when Jing Daily spoke to several store associates at the China World Mall in Beijing, home to many luxury brands’ flagship stores, they recognized the demand boom quite soberly: “Mostly driven by the price rise”, or “because people are unable to travel abroad, many allocated their travel shopping budget domestically, especially now the price gap has narrowed,” and “brands like Hermès and Chanel especially are in demand because of their investment value,” are all reasons attributed to the allusion of revenge spending.

All in all, the drive behind such a scene is obvious – consumers are more price-sensitive than ever, and their luxury purchase decisions are largely driven by price which has implications for it’s counterpart, revenge saving.

The Rise of ‘Revenge Saving’

‘Revenge saving’ is the latest buzzword coined by the Chinese media while the hashtag #Ditchyourself has become a new mantra for the younger generation – it has millions of views with numbers still climbing. Many netizens are also flocking to online groups such as ones dedicated to the Japanese art of de-cluttering.

As the epidemic eases, the demand to sell is growing among consumers eager to make money and de-clutter. Like Ting, some shoppers are more eager to clean out their closet due to financial incentives. Statistics show on the second-hand shop platform Idle Fish, in March, the daily average number of transactions and amount of has reached a record high, the number of new sellers increased by 38.8% year-on-year.

While many citizens are finding ways to adjust to the pandemic, the younger generation in particular are likely feeling the brunt of the psychological trauma most deeply. COVID-19 unexpectedly dented their future outlook on work and life, and uniquely to them, this will be their first economic downfall they face. Many newly graduated Gen-Zs will face difficulty entering the job market and others may choose to delay finishing degrees; these unexpected hardships will hugely impact their spending mentalities. As for large item investment like housing or cars goes, many will adopt a wait-and-see approach.

“Saving has to do with a lot of things like investment channels, retirement plans, and family structure. These have not taken a drastic change yet, so revenge spending is not here to last,” explained Louis Zheng, a trend analyst and co-founder of Futurist Circle in China.

“On a macro level, the pandemic accelerated the natural economic cycle in China, which had already slowed down. The presence of social media breaks down barriers between revenge spending and saving, and amplified both but neither is here to stay,” he added.

Such predictions reflect the latest research report from Kantar China in which luxury consumption overall is seeing a V-shaped recovery. The report suggests that brands can differentiate their marketing strategy to two increasingly polarized groups: one which is more conscious and the other eager to spend.

A Complex Future Outlook, Yet Still Rosy

But, exactly how much can luxury brands count on either and will this change undermine the existing consumer base for brands in any way?

The latest Bain & Co. luxury report pointed out anyone below 45 years old — which will account for up to 150% of luxury market growth by 2025, with Gen-Z and Gen-Y globally – is making up 50% of the market. Baby boomers, once the world’s dominant consumer base, continue to shrink. However, brands need to be patient when waiting for this group to grow up.

Zhou Ting, head of research of Shanghai-based Yaoke Research Institute, places luxury shoppers into three categories: Core, marginal and potential consumers. She observed that in recent years, many brands are facing the missing core consumers while most increases come from marginal and potential consumers – especially the younger generations who, as observed, are more likely to be impacted by the virus.

These younger buyers have yet to become the core consumers for luxury brands however the population base is so huge that the opportunity is still present – despite their average order value being low currently.

Now is the time for bands to invent new products to suit their needs as some may well transition into loyal consumers. This doesn’t change the trajectory of this spending generation as their income rises at single digits or more: They will have more disposable income for luxury spending – even if it means second-hand luxury, the demand will still remain.





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JD.com Heats Up the Battle for 618 Dominance


What happened: 

E-tailer JD.com kicked off China’s 618 festival today by announcing that sales have already soared across a number of categories. During the four phases of the mid-year shopping event, an estimated 200 million new products will go on sale. This year’s 618 coincides with the 17th anniversary of JD.com and will see the e-commerce giant distribute at least 10 billion yuan worth of compensation and vouchers as well as 100 billion yuan worth of discounts. DJ.com also inked a collaboration with video sharing platform Kuaishou for the event. 

The Jing Take:

As countries across the world grapple with the aftermath of COVID-19, this is the first large nationwide shopping festival in China since the outbreak; the results will be a solid indicator of China post-pandemic. According to JD.com’s initial figures, China’s appetite for online consumption stands strong: the first hourly report indicated the transaction volume of luxury products increased by 400% — surpassing total sales of 2019’s June 1 — though it is currently unclear if the financial incentives have been reflected in the totals.  

Moreover, the recent deal with Kuaishou indicates that livestreaming will continue to shape future online retail trends. With additional partners like Douyin, Bilibili, and Huya, JD.com aims to facilitate over 300,000 livestreams sessions during the event (from vloggers to government ministers to CEOs). As 618 continues, expect the battle to heat up between JD.com and Alibaba

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.





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Key Takeaways from the Webinar ‘Decoding Daigou: China’s New Social Commerce’


On May 28, Jing Daily’s editor-in-chief, Enrique Menendez, hosted Renee Hartmann, co-founder of China Luxury Advisors; Bo Wang, the chief executive officer of YouWorld; and Yue Jin, a “Personal Product Hunter (PPH)” for a webinar on the rise of social selling in China and its impact on cross-border e-commerce in a post-COVID-19 world.

The webinar kicked off with some insights from a survey initiated by CLA that tracked over 215 daigou agents based primarily in the United States during April, showing how COVID-19 has affected their business. After presenting the analysis of the current daigou climate, Hartmann, Wang, and Jin dove into how brands could strategically engage this powerful consumer group. They also discussed how social selling is currently driving luxury brand growth in China. Below, Jing Daily highlights three key takeaways from the webinar:

  1. The daigou market is resilient despite the COVID-19 outbreak

The worldwide COVID-19 pandemic has impacted the daigou business since January with travel restrictions, delayed shipping/delivery processes, negative customer sentiments, and more. According to CLA’s survey on the current daigou climate, over half of respondents said that business is down a minimum of 15 percent from before the COVID-19 outbreak.  Among the factors most challenging to their business, longer shipping times were the top concern, just above a decrease in customer demand. Given this, the daigou market is expected to resume so long as the shipping and delivery services get back on track.

And as China set out on its road to recovery, demand has grown for daigou services, starting in April. According to the survey, 32% of respondents expected more spending on daigou and cross border e-commerce through international retailers and brands.

  1. Reevaluating daigou in the post-COVID era

‘Daigou’ is a loose term for niche luxury sellers who focus on complicated cross-border exporting policies (often seen as a grey area in luxury sales), but this phenomenon deserves the attention of global brands and retailers wanting to secure more high-end Chinese consumers. This consumer group isn’t just making purchases on behalf of someone else, but it can also be viewed as a ticket to understanding the logic behind China’s social-selling landscape.

Unlike the typical customer-to-customer business model, the daigou business is personal relationship-driven. Daigou agents spend time communicating with customers on a personal level and recommending products based on their interests while gaining considerable trust from their customers. This model contributes to a lucrative market in China since local consumers tend to trust human relationships more than brand marketing information.

Meanwhile, as selling and communication predominantly happens on social platforms like WeChat, Taobao, Weibo, Little Red Book, and Douyin, daigou agents have taken on the role of influencers by introducing the latest products, brands, and trends to their clients. And as social selling took off after COVID-19 thanks to more social platform users and a thriving livestream industry, daigou agents started functioning as middlemen who can help emerging global brands build awareness among local consumers.

  1. Rethinking strategies to include daigou

Brands have always been cagey about interfering in the daigou business and were shy to officially engage with them, as their dealings have commonly been with store salespeople and PPHs. But their target consumer group doesn’t only contribute to the European and North American markets, but they also drive China’s market long-term. Thus, brands can take advantage of daigou to further grow their Chinese consumer base if they think globally.

Brands’ relationships with PPHs are currently controlled by in-store salespeople, which is difficult for brands to monitor or manage. Given that PPHs are not necessarily Chinese or overseas residents — and are often outbound travelers or students — building up a global customer relationship management (CRM) system would be crucial for tracking and engaging this powerful consumer group, wherever they live.

Also, exclusive and early access to products and discounts are vital for optimizing PPHs’ shopping experiences since they need to build their social content — including photos, videos, and livestreaming — to showcase these products to their clients.





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Up To Half Of All Luxury Brands Won’t Make It — Here’s Why


Many luxury brands are like zombies. They exist, but they can only move forward with a vague desire to feed. But even zombies will die if they encounter an extreme disruption.

During the current COVID-19 crisis, I believe that up to 50 percent of today’s luxury brands will collapse. You read that right: up to half of them. The brands that claim to be luxury companies yet don’t create extreme value will be the first to go. In other words: the ones that think charging high prices is equal to “luxury,” which is a fatal error.

The virus will be named the “official” cause of death, but in reality, it will have been something else. In most cases, brands will be to blame for neglecting the most fundamental task: delivering significant value to customers so that they’re willing to pay a significant price.

For years, a lot of luxury brands defended their overreliance on physical stores with the claim that they provide experiences for their customers. But few top brands excel at creating memorable experiences, and most brands only deliver lip service.

If there’s no memorable experience, then there’s no value. And if there’s no value, then there’s no distinct value creation, which means no loyalty or buzz. Unfortunately, I’ve found dramatic shortcomings in this area for most of the brands I’ve studied. Creating memories does not happen by chance. It depends on a precise brand definition, a clear value creation model, and excellent execution. This call to action was years ago (not during this pandemic), but many brands didn’t see the writing on the wall.

I saw many striking examples of these brand deficiencies on a visit I made to several luxury brands across Asia. In one case, my experience visiting one of the most admired German luxury car brands was so negative (due to an arrogant salesperson) that I left the dealership in a state of shock. Then, I needed an important question answered by the luxury hotel I was staying at before I arrived, but I couldn’t reach a staff member for hours. The hotel made a typical luxury brand error by forcing a guest to move from one place (check-in) to another (concierge) because staff members could only perform specific duties. From a customer perspective, this creates burden and frustration instead of a luxurious experience.

These mistakes have catastrophic implications. Brands are gambling with their most important asset: their customers! The unfortunate reality for many luxury brands today is that their experiences are still too transactional, too beholden to old industry standards, and not nearly personal or memorable enough. They’ve become an interchangeable category journey, rather than a distinct brand experience.

Many CEOs state that what sets their luxury brand apart is the personal experience consumers have in their stores, assuming it’s a fashion/lifestyle brand, hotel, restaurant, or car dealership. But when I study their brand experiences and benchmark them against their competitors in the same space, I often see a recurring pattern: Their experiences don’t differ from a lot of other ones. One service may be slightly nicer than another, or one store’s architecture might be more impressive than another’s, but that isn’t enough to create an authentic, relevant, unique, or memorable luxury experience.

Category journeys aren’t the same as distinct branded memories. This is a crucial point that luxury brands often get confused. Mapping the entire customer experience across every sales touchpoint is completely necessary. Only when the experience at each touchpoint is strong will the brand story allow a brand to be competitive. Even one “red flag” is enough to tank an entire brand perception. So the brand story must be precisely defined.

Brand storytelling is a holistic task. A brand must first know what it stands for, and then it must rigorously apply that story across its entire customer journey, without exception. It sounds simple, but it’s the most significant issue for underperforming brands. Without addressing it, brands are just “putting lipstick on a pig” by taking different measures. And, even worse, when consumers notice brands aren’t addressing this main point, they see the brand as inauthentic and will move on (and tell others to as well).

That’s why regular brand audits are critical for fine-tuning a brand’s positioning and customer journey. Only then can a brand fix identified gaps with fast and precise countermeasures. If a brand’s story is weak, it has to be addressed immediately, or competitors will take advantage, or consumers will opt out entirely.

The speed of change can be hard on brands. One fashion brand I spoke with lost 30 percent of its young consumers over the past calendar year. The CEO couldn’t believe how fast change hit him, and without drastic measures, his brand wouldn’t be saved.

Again, luxury must always be about creating memorable experiences. When I think about the times that brands have created an unforgettable experience for me, they are few and far between (even in the luxury industry). While recently scrutinizing leading luxury fashion and leather goods brand stores, I was reminded more of department stores than refined, high-class, luxury stores. Not once on my pilgrimage was I offered something that made my shopping experience feel special, and every interaction with store staff felt rushed. None of the experiences were convincing, memorable (in a positive way), or created any brand equity. In fact, it was the opposite: I would never return to most of those brand stores if I had been a real customer.

A lot of brands need to address this issue. When consumers start spending again after this crisis, they’ll be much more discerning about their luxury shopping experiences. For brands, there is no time to be complacent.

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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Can Voice Shopping Become China’s Favorite Retail Hack?


According to Alibaba Group’s news hub, Alizila, “Chinese consumers are increasingly turning to smart speakers to shop online, instead of their phones.” During Alibaba’s last 11.11 Global Shopping Festival, more than 1 million orders were placed and paid for via Tmall Genie’s voice-shopping feature, and data from Canalys shows that Alibaba sold 3.9 million smart speakers in Q3 2019. Both Alibaba and Baidu increased their market share during Q3 2019. Alibaba’s market share increased from 11.1 percent to 13.6 percent year-on-year while Baidu grew from 4.9 percent to 13.1 percent over the same period.

The global leader in smart speaker sales remains Amazon, with 10.4 million units sold during Q3 2019. The Chinese search engine Baidu came in third with 3.7 million smart speakers.

Baidu, in particular, has seen incredible sales of its smart speakers over the last two years. And the Financial Times rightfully points out that “Baidu is betting that the smart speaker will be the next smartphone.” And according to Canalys, Baidu has further expanded its mobile phone assistant solutions, announcing in July of 2019 that its DuerOS assistant was going to be available on over 400 million devices.

Electronics company Xiaomi is also developing a new smart speaker gadget, but its design is a bit more controversial. Most tech nerds know that Xiaomi is no stranger to polemics, and in the past, it was accused of copying Apple’s design. Unfortunately, the criticism didn’t end with the release of its new smart speaker. According to Voicebot.ai, the patent for its cylinder-shaped smart speaker was published by China’s National Intellectual Property Administration (CNIPA), but the design is almost identical to the Apple HomePod.

Since most smart speakers have similar designs and functions, Chinese technology companies have been forced to engage in an ongoing price war. Abacus News reports that during Alibaba’s Singles’ Day shopping event in 2017, Alibaba cut the price of its Tmall Genie from $72 (499 yuan) to $14 (99 yuan). Xiaomi followed suit by reducing the price of the Mi AI Speaker Mini to $14 (99 yuan), and in June 2018, Baidu released a $12 (89 yuan) smart speaker.

Alibaba’s A.I. Labs states that millions of shoppers took advantage of Genie to buy products varying from packaged snacks to eggs or rice. But the success of smart speakers isn’t surprising when you take into account how easy the feature is to use the customized and highly personal shopping experience it offers. Furthermore, senior citizens who don’t have a familiarity with complicated e-commerce platforms or aren’t accustomed to modern technologies might engage with smart speakers to have a hassle-free experience. This convenience simplifies the entire shopping experience and makes it more personal and straightforward.

Voice assistants like Amazon’s Echo or Alibaba’s Genie are not a recent discovery, as the technology has been around for years. But the technology upgrade from performing simple tasks like playing music or providing event information to streamlining the online shopping process has been nothing short of groundbreaking. In fact, its new AI features are the next big thing in e-commerce because they offer a more personalized and authentic experience for the consumer. Conveniently, this type of interaction between shopper and online retailer rewards both sides. The consumer is guided along a more informed purchase journey while a seller can overcome specific challenges like the high cost of returns or customer indecisiveness.

Let’s look at how and why ‘voice commerce’ will change retail for good:

Enhanced shopping experiences

One difficulty that’s often associated with online shopping is finding the right product in a catalog of millions of items. A shopper familiar with Aliexpress or Amazon knows that buying anything on these platforms usually means searching through millions of products to find the right one. This can be a dreadful or discouraging experience for many people.

I find online shopping to be a tedious experience because I don’t have the patience or time to browse for hours until I find a robotic vacuum cleaner or a dress. Instead, I prefer to pay a premium to shop in a brick-and-mortar store so that a retail assistant can offer me highly-personalized product information. And I’m hardly alone. In fact, McKinsey highlights that “since 2017, Chinese shoppers have made a noticeable shift back to physical stores, especially shopping malls and mono-brand retail stores.”

But voice commerce can simplify the process for those who are too busy or disengaged like I am. Instead of browsing the internet for hours, I can use a virtual assistant that responds to a command such as “find a short-sleeve blue polka dot dress.” Then, in a matter of seconds, the smart speaker comes up with product recommendations in line with my past shopping habits and preferences.

This highly curated offer is more personal, and it helps the shopper better connect with the website or the brand. It also helps buyers overcome “the paradox of choice” and triggers impulse buying.

Providing exceptional customer service leads to increased interaction

“By tapping into Alibaba’s diverse ecosystem and cutting-edge technology, we are committed to bringing more unique experiences to our Tmall Genie users,” said Ku Wei, the head of development for Tmall Genie.

These “unique experiences” give Alibaba a competitive edge in the smart speaker market. Furthermore, they fall in line with the experiential retail model Alibaba consistently promotes by deploying AR/VR solutions that increase interactions with shoppers.

Since smart speakers act as virtual assistants, they can provide real-time advice on sizing, fabrics, colors, models, brands, and even shipping times. They also can offer input on quality issues and flag products that have poor reviews. This leads to increased customer satisfaction and loyalty.

Recommendations in line with the available inventory

Another common issue with online shopping is the “out of stock” problem.

Years ago, I ordered a dress from Asos and received an incorrect item, and by the time the online order reached me, the dress that I originally acquired was out of stock.

What followed was hours of frustrating discussions with chatbots. After a couple of days, I got exhausted by standardized replies, and after one of my most unfortunate customer experiences to date, I deactivated my Asos account. In the end, Asos lost a loyal customer, and I got stuck with an ugly and overpriced top that ended up in my donation pack.

But I’m hardly the only one to have an unpleasant experience like this. In fact, receiving an incorrect item while paying for an out-of-stock product is so common that Asos has created separate pages addressing the issue.

Retailers that use such subpar tactics like these appear unreliable or dishonest, and they greatly risk losing their loyal customers. But this “out of stock” problem can even happen to retailers known for its outstanding customer care, and it can cause serious damage to a company’s reputation.

Fortunately, challenges with inventory management can be addressed and overcome with modern technologies. For instance, smart speakers can be directly connected to inventory, so sales tracking can be completely accurate. This way, the customer receives direct feedback on a product’s availability, and the seller knows what items are in high demand.

Voice commerce is fast becoming the future of retail, but there are still some challenges that lay ahead for the technology. A report by the Microsoft Market Intelligence and Bing Ads Marketing shows that ‘data security’ and ‘passive listening’ are top concerns for smart speaker users, and around 41 percent of those users have concerns surrounding trust, privacy, and passive listening. So until consumer privacy and security are fully addressed, many online shoppers won’t find voice shopping’s convenience worth the risks.





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Capri Holdings Blames COVID-19 for Financial Reporting Delay


The global luxury group, Capri Holdings Limited, has decided to delay releasing its most recent quarterly financial statement for up to 45 days, though they did give investors a positive update on global store openings and Asia’s recovery. 

The company, which owns Michael Kors, Versace, and Jimmy Choo, originally planned to report results for the fourth quarter and fiscal year ending March 2020 this week. But in the filing submitted on May 19 to the Security and Exchange Commission, the financial agency that regulates US securities, Capri said that it needed more time for analysis. It wrote that corporate employees involved in finalizing the financial statements are working remotely, and expected to file the annual report for fiscal 2020 before July 11 instead. The company did not respond to a request for comment before publication. 

Capri, however, released a statement on May 28 updating investors on global store openings. To date, they have opened over 50 percent. While the Americas, its largest market, has only a 15 percent of open rate across 455 stores, Asia leads the recovery pace. In Greater China, all of its 288 stores are now open. “Where stores have been open the longest, volumes began to gradually build, with sales in April and May approximately flat to last year at Versace and Jimmy Choo, and approximately 80 percent of prior year levels at Michael Kors for the same period,” the company said in the statement without disclosing further numbers. 

Jing Take

While delaying financial reporting is allowed by the SEC with in-time communication, the market and investors didn’t react well to Capri releasing only good news. It’s evident in the fall of their stock price, which shed 6.60% to $15.29 per share by early afternoon in New York, as the Dow and S&P 500 fell by less than 1%. 

It’s expected that Capri’s revenue, like the rest of the luxury industry, will be down during the most severe time period of the ongoing COVID-19 crisis. According to Zacks Equity Research, Capri’s fourth quarterly revenue is expected to fall by 12.5%. The question is: will Capri’s actual earnings be larger or smaller than what Wall Street analysts expect? 

With the answer more than a month away, the uncertainty is not great for investors. It might be encouraging for them to read that e-commerce sales of “Versace and Michael Kors almost double prior year levels in April and May” and knowing that the Chairman and CEO, John Idol, remains “confident and optimistic.” But without specificity, it is difficult for investors to gauge the full picture. As a result, Capri’s rosy update on global store openings may not be viewed as a hint of more good news to come, but as an act to divert attention. We’ll know for sure in early July. 

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.





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Alibaba Attempts to Replicate Taobao Model Overseas


On May 28, Alibaba debuted a most ambitious plan: they want to mobilize 100,000 global influencers — growing this number to over one million within three years — to create original content to increase users and engagement on their B2C marketplace platform AliExpress Connect. According to the company, it’s a first step to replicate Taobao’s model in the West. 

Here’s how it works. Whether you’re a consumer or influencer, as long as you utilize your network to sell, you can register on AliExpress. It’s essential to choose a brand to promote, and based on your exposure and sales performance, you’ll commission will be adjusted accordingly.  

The promotion channels would be Western-facing social media platforms, and ways of promoting varies — it can be as simple as to copy the product info to WhatsApp groups, or to post on personal Instagram feed, or even display at offline locations. 

The platform was created to help Chinese vendors connect with influencers in the West, while also enjoying additional organic exposure and traffic. As for now, the focus will be on Europe, where consumers from Russia, France, Spain, and Poland make up the majority of AliExpress users.  

Jing Take: 

Alibaba is pushing forward this initiative at a critical time, positioning the marketplace as a way to create new job opportunities and income streams during the ongoing COVID-19 crisis. But can it really attract one million influencers within three years outside of China? 

The platform encourages people to share within the AliExpress app, hoping to create a shopping environment similar to Taobao, where consumers browse content instead of simply making a one-time purchase. Replicating this model outside of China is likely to be challenging, as consumers in the West share a different shopping behavior than consumers on the mainland. Their e-commerce shopping behavior is more: purchase something and leave. To date, e-commerce sites in the West are transitional and not a form of entertainment as they are in Greater China. Will Alibaba be able to change this with AliExpress? There’s a million reasons why they might be able to. 

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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ILIAD Catamarans Power Ahead With Strong Sales in First Year


ILIAD Catamarans has made a stunning impression on Asia-Pacific’s yachting scene with nine of the long-range performance power catamarans sold since the brand’s 2019 launch.

The Iliad 50 debuted at the Sanctuary Cove show last year

The ILIAD 50 was the first model produced by the new brand

The ILIAD 50 was first of the range to be launched and was unveiled at the 2019 Sanctuary Cove International Boat Show, with the inaugural model selling to a keen couple just minutes before its official christening.

Four more ILIAD 50s have since been sold plus two ILIAD 70s following the larger model’s launch at last year’s Sydney International Boat Show. The upcoming ILIAD 60, due for release in late 2020, has already had two orders placed.

Mark Elkington, CEO of ILIAD Catamarans, said the brand’s first-year results have been an amazing testament to the years of research and development invested in the range by its internationally accredited team of designers and naval architects.

“While we wanted to first and foremost create a range that allowed buyers to design a power boat that suited their unique needs without the exorbitant cost, we also have employed the finest minds in naval architecture to ensure each boat delivers outstanding passage-making performance,” Elkington said.

“We set out to develop true long-range power catamarans that make no compromises, and each cat has been designed with an emphasis on safety, strength, stability and economy.”

The ILIAD 50 salon offers owners and guests great vistas

The ILIAD 50 salon offers owners and guests great vistas

The catamarans are particularly unique in that clients are able to customise many aspects of their chosen model to reflect their individual style and needs but without the epic cost involved in changing aspects of most production and semi-production power catamarans.

Clients are free to choose their own preferred layout, interior finishes, electronics package, fabrics, engine options and more, at an extremely cost-efficient rate.

All of the ILIAD catamarans are also sheer achievements in power cat design, delivering safe and comfortable offshore performance with some of the longest-range capabilities in their market segment (2,500-6,000nm), he said.

The ILIAD brand results from a successful collaboration of Riccardo Bulgarelli, Global Marine and Xinlong shipyard, with all entities bringing a wealth of expertise to the project.

The range is produced at Zhanjiang at YuanHe Xinlong shipyard, one of the few established shipyards in China that constructs premium-quality explorer-type boats for the world market and uses only the highest quality of internationally imported materials.

Master suite on the ILIAD 50 has all the comforts of home

Master suite on the ILIAD 50 has all the comforts of home

Its impressive facility near Hainan overlooks the famous Zhanjiang Bay Bridge with waterfront launching access and boasts an expansive team of internationally trained staff who have already made waves in the industry with the construction of Bering’s luxurious 65ft, 77ft and 80ft motor yachts.

The mastermind behind the design of the ILIAD range is Bulgarelli, the renowned naval architect who worked in Italy for many years for some of the world’s leading shipyards before establishing his own design office in China.

Bulgarelli has designed and project-managed the build of many exclusive custom vessels as large as 112ft for successful export to the world market. Global Marine is currently developing a strategic international dealer network for the brand.

Recently appointed Asia-Pacific dealer Multihull Solutions purchased the initial prototype based on the ILIAD philosophy and design. Multihull Solutions has a strong reputation in the Asia-Pacific region, and wanted to be confident it was the right product to add to their range.

The prototype was extensively tested with sea trials and ocean passages across the South China Sea, meeting head on with conditions that would challenge any ocean-going craft.

ILIAD 70 extends the already substantial range and volume of these long-distance cruisers

ILIAD 70 extends the substantial range and volume of these long-distance cruisers

Multihull Solutions General Manager Andrew De Bruin said the Christmas typhoons that hit Vietnam were a real test for the boat.

“The crew got caught for 24 hours in up to 7m seas with winds of 70-80 knots before they made shelter. However, they felt very safe and comfortable on this boat, even in the most intense conditions”, Andrew said.

After clocking 1,000 engine hours and almost 10,000nm, the data from this prototype project was analysed by all stakeholders, including the design team, and implemented across the ILIAD range to ensure the market would receive a boat that was up to the planned demanding standards.

“This project, while costly, was worth every dollar and hour invested. We wanted to get this right, not sell the first boat to a client and see them go through the typical ‘first-boat debugging’ challenges,” Andrew said.

“Multihull Solutions has handled dozens of new model releases over the past 12 years, and we wanted to ensure we approached this project differently and learnt everything possible to fully understand the systems, make recommendations, and minimise compromises that are evident in all boats, then give feedback to the builders and design team.”

Custom options for salons and dining include this set-up shown at last year’s Sydney show

Custom options for the interior include this set-up shown at last year’s Sydney show

Many engine options are available, and ILIAD catamarans all come with standard inclusions, including dual-control electronics as well as systems for fuel transfer and blackwater and power management.

Each model also features flybridge hard tops, resin-infused hulls in full vinylester resin, Tecma fresh-water flush electric toilets, bathroom extractor fans and an ocean of other premium-quality fixtures as standard inclusions.

ILIAD catamarans are built to CE (Cat A) as standard, although all models can be built to any specified international survey classification and include a five-year internationally supported structural warranty for commercial operation and maximum peace of mind.

ILIAD has designed each model to evoke the comfort and style of luxury apartments with unsurpassed space in all their living areas. Conceptualised with long-term cruisers in mind, the catamarans are extremely functional with excellent flow across the various zones.

The standard forward lounge in each model provides amazing 360-degree views, and, unlike many other modern power cats, ILIAD has introduced an option for a spacious master suite in the main deck to optimise the use of space and create a naturally light, airy and idyllic retreat for those cruisers who want to live on one level.

An exciting custom idea is having the ILIAD 70 master suite facing forward on the central deck

An exciting idea for the ILIAD 70 is having the master suite facing forward on the deck

Beautifully appointed gourmet galleys are standard across the ILIAD range, and storage facilities are in abundance for extended cruising. As with the rest of the boat, the galley can be completely customised to adapted layouts, or clients can add and remove any fixtures or styles they desire.

The flybridges can be left entirely open, or can be fully enclosed with ducted air conditioning, or owners can elect to have the best of both worlds with high-quality clears that can be opened and closed as the elements demand. Sedan options are also available if a flybridge is not a requirement or bridge height restrictions are a factor.

Wide, safe walkways are part of each design with hand rails at a comfortable height for complete security at sea, while clear, uncluttered decks and huge deck storage facilities make offshore passages practical, safe and carefree.

Just like the legendary Achaean ships of Homer’s epic, ILIAD’s catamarans are designed to face the most treacherous conditions with confidence, which is a heavily tested hallmark of the ILIAD range’s DNA. Ideal for extended passage-making cruises, each model affords impressive range and speed with competitive fuel efficiency.

The company’s standard recommended engines deliver a long-range cruising speed of seven knots at a fuel burn between 1.2-1.6 litres/nm, with a range of up to 6,000nm (depending on the model).

Galley facilities on these vessels are really restaurant-quality

Galley facilities on these vessels are really restaurant-quality

Well-trimmed fore and aft at all speeds, the catamarans are able to explore farther than their competitors with the protective grounding skegs making them beachable in emergencies or for servicing in remote areas.

Elkington says the ILIAD design is all about minimising the many compromises in both mono and multihull vessels for extended liveaboard cruising to more remote places to see unspoilt cruising grounds and locations that are just not accessible with most mainstream power boats.

“Firstly, we wanted to make a boat that was safe and as comfortable as can be for each model’s size, to offer more comfort for the crew,” he said.

“Multihulls were the natural choice for this project as they not only offer the stability without complex stabilising systems, but we have a separate engine room in each hull.

“In the event of water entering an engine room, having separate engine rooms offers real peace of mind. You are highly likely to always have one engine to get you to safety.

Multihull Solutions Launches Weekly Webinar Series

“Not many power boats offer such shallow drafts either, of 1.2-1.35m (depending on the model) while offering such volume per metre of boat. Shallow draft allows safer anchoring as you can access the most interesting bays and inlets to see places you’d normally pass by.

“Further, you have the security of a keel-skeg to protect your running gear should a grounding occur, or more likely, if you touch the ocean floor while at anchor at low tide.

“While we are not promoting that our boats are designed to run aground, the design does offer owners peace of mind if they touch the ocean floor while at anchor or while navigating at low speeds into a difficult shallow waterway or an area of poorly charted water,” he said.

Standard fuel specification by model provided can be discussed with each buyer and increased if the specific choice of model requires more range at a particular speed. But Elkington cautions that with multihull hull design, buyers cannot have it all.

ILIAD Powercats Built in China Enjoy Phenomenal Sales

“A top speed of over 25 knots does not necessarily give you fuel efficiency and longer range at lower speeds, just as impressive fuel burn figures of seven knots that achieve just over one litre per nautical mile will not give you a high top-end speed.

“ILIAD has balanced design around the best of both worlds, offering very impressive long-range fuel burn numbers of 1.2-1.6 litres/nm, depending on the model, with respectable top-end speeds of 20-22 knots; ideal passage-making speeds of 8-9 knots with very comfortable fast cruise speeds of 16-18 knots.

“Our boats will not appeal to those buyers who just want speed, bling and gadgets. Simplicity and ease of operation is our ethic, and you will see this in all our boats.

“Systems have to be simple, logical and manageable with the resources you have on board. All clients are not engineers, mechanics and electricians, so minimising complex systems is part of ILIAD’s objective. Back-up systems and redundancy can be built into each ILIAD – that’s our power of choice.”

www.iliadcatamarans.com.au

YACHT STYLE Issue 53: Catamarans Shine in ‘Multihulls Issue’ 2020

 



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Can China’s Resale Market Threaten Luxury?


Chinese netizen Banlimi (半粒米) loves vintage bags. She browses platforms like Vestiaire Collective, where she frequently finds limited-edition products or unique designs. Meanwhile, the cost-effectiveness of these second-hand luxury products is what’s most attractive to her friend Vincci (桃子小姐). Banlimi explains on Weibo how easy it is to buy used limited-edition Hermès compared to buying new products in-store, and Vincci adds that buying used fashion is a good way to be more sustainable.

In a market that has been traditionally opposed to pre-owned goods, comments like these mark a dramatic shift. Yet as consumer trends change, this is hardly surprising. Chinese consumers have always sought variety, newness, and affordability, and recent budget constraints due to COVID-19 — alongside an uptick in wellness trends — have meant that Chinese citizens are considering their purchases more. For some, the answer is to stop buying altogether: The Gen-Z movement #ditchyourstuff now has 150 million views and 177k discussions in China.

Coresight Research has identified that as China exits the pandemic, consumers are saving money and adopting a more rational approach when it comes to spending. Travel limitations mean new holiday trends adopted by young Chinese working in major cities such as ‘vintage shopping’ in Japan (#Japanesevintage has 73,000 posts and 25 million views on Weibo) will likely lead to sales on re-commerce sites instead.

Prior to the pandemic, the research agency Mobdata estimated the overall resale market would reach around $178 billion in 2020. The Boston Consulting Group reported that a rise in the buying and selling of pre-owned luxury was predicted to increase turnover from $25 billion in 2018 to $36 billion by 2021.

These post-pandemic trends are good news for the sector, but if resale continues to grow at current predictions, where would that leave the primary luxury market, which is largely dependent on Chinese consumers? Jing Daily takes a look at recent trends in the sector and ways that luxury brands can protect themselves against this trend.

China’s ocean of resale is a nuanced landscape. From physical retail to auctions and registered daigou to personal shoppers, vintage dealers, KOLs, and celebrities, the channels are many and varied, and the term “second-hand” even regularly disputed. However, e-commerce dominates the market, and re-commerce apps have slowly been penetrating China’s digital infrastructure over the last decade.

Established local apps like Alibaba’s Idle Fish (China’s largest re-commerce trading platform with 200 million registered users, half of whom were born after 1990) focus on selling second-hand products. Luxury e-commerce platform Secoo, which sells both pre-owned and new products, has been joined by startups like Plum, Yousheyipai, and Go Share 2. And now that the international platform Vestiaire Collective has recalibrated its focus onto China, the luxury resale market has never been more competitive.

Resale trends during and after lock-down

During COVID-19, platforms of all sizes, from Plum to Secoo, have reported an acceleration in usage. According to Katy Cheng, a research associate at Coresight Research, this might be explained by the fact that Chinese consumers have been adopting a more rational spending mindset. This trend, in turn, could lead to a rise in the ethical purchase models that these consumers now want. “This change of consumer mindset, coupled with price hikes from some heritage luxury brands, could benefit the resale market,” Cheng stated.

This change is visible in the large sales increase for brand offerings at affordable price points in China, said Lucie Finet, head of Hong Kong and Greater China at the global pre-owned luxury site Vestiaire Collective. “Resale is becoming a part of daily life,” Finet added. “We have seen an increase in sales — three-times more sold in two months — especially driven by medium price points.” In real terms, this means that they’re selling more “affordable” luxury brands like Marc Jacobs.

A piqued interest in accessible luxury is positive news for re-commerce more widely, and Vestiaire Collective noted that “the monetization of wardrobes has driven more frequency in selling behaviors,” since Chinese luxury buyers now see there’s a market for their so-called ‘pre-loved’ items. Simply put, Finet has witnessed consumers “selling more everyday items.”

The livestreaming video app Douyin has seen a rise in vintage sellers of pre-owned luxury bags, while the luxury livestreaming app Feiyu has also grown in popularity. A spokesperson from Secoo agreed that livestreams featuring second-hand goods, where audiences can request to see wear-and-tear up close) has exploded over the last few months, garnering between 20,000 and 30,000 views per session.

Building trust and authenticity

Celebrities are not only normalizing the trend, but they are also helping give the sector credibility, and Idle Fish has seen several celebrities open accounts. Chinese actress Zheng Shuang, who has roughly 2.6 million followers on Idle Fish, sold an Hermès notebook on the platform that had an original price of roughly $77 (550 RMB) for $21 (150 RMB). Athena Chen, WGSN’s Senior Editor for the Asia-Pacific region, suggested that “Celebrity-sold goods are particularly popular among luxury shoppers because they trust the authenticity of items owned by celebrities and aspire to follow their fashion tastes.”

The kind of consumer trust that’s found in a KOL or peer group has been central in overcoming resale’s biggest stumbling block: authenticity. The origin of a product isn’t an issue when buying new products in a store, so re-commerce companies have had to work hard to address this issue. Moreover, the growth of second-hand product livestreaming with ‘high def’ cameras, which allow audiences to see the products up-close in real-time, helps inject more integrity into the sector.

Idle Fish allows users to build “fish ponds” of shared interests or locations where sellers can build a sense of community through word-of-mouth recommendations. Companies like Secoo have kiosks where goods can be repaired, and where they also display additional products for consumers to see and inspect. On top of that, the site also sponsors partnerships with endorsed collaborators, such as Vestiaire Collective’s tie-up with the retailer Joyce, to further change perceptions of credibility.

Ensuring credibility is even more necessary when supply and demand trends fluctuate or when Chinese buyers become the suppliers. Pierre Everling, the chief regional officer APAC, at Vestiaire Collective, predicts that China will soon be the biggest second-hand supply market, but one of the key reasons it hasn’t materialized yet is trustworthiness. But is there a way Vestiaire Collective can help?

“We are pushing and empowering our community to provide that trust in the market, and we have processes and tools that we’ve developed to bring this authenticity to the market,” he stated. And since that Chinese buyers are the biggest consumers of luxury goods globally, it only makes sense that some have already tapped into global selling platforms. Chen at WGSN noted that savvy Chinese sellers are already taking to channels available in the West, like Depop, to broaden their consumer base.

How fashion brands can foolproof themselves as resale grows

Provided China can address this issue of trustworthiness, brands should think carefully about how to position themselves against this new exchange model. The Boston Consulting Group’s report suggested the resale sector could bolster designers’ impressions. In fact, the report said the segment offered a “powerful opportunity for luxury brands to boost their image and expand their consumer base.”

Chen recommended that brands create their own resale channels for bringing reuse and recycling into their consumers’ shopping journey. In addition, they could establish an official presence on platforms that have a luxury focus and a reputation for authenticity. “Brands that offer the chance to shop vintage styles will be more likely to engage consumers beyond the initial sale of new products and attract consumers looking for unique items, as opposed to ubiquitous seasonal trends,” Chen said to Jing Daily.

Secoo’s spokesperson adamantly stated that these re-commerce platforms aren’t damaging to brands and that they’re actually helping bounce customers to brand stores at a later date. Furthermore, the Boston Consulting Group report showed that sellers of second-hand goods are most often buyers of first-hand luxury items.  Therefore, luxury brands could view the re-commerce market as complementary in the way it makes the same products (albeit pre-owned) more affordable. Finet considers second-hand products and Vestiaire Collective to work “hand in hand” with brands. “Some millennials who can’t afford a full-price Louis Vuitton bag might go to a resale platform, so it’s the first touchpoint with the brand,” she said.

Going forward, brands need to devote more attention to a product’s entire lifecycle — not just its initial sale — by rethinking distribution, which will validate full-price goods through a variety of sellers. Given their domination of the China market, KOLs also need more specialized strategies that would benefit brands. Gifting is one channel to explore, and Chen observed that many resale items that were purchased through KOLs were as PR gifts from luxury brands.

Fashion norms around the world have been dramatically rewired. The fashion week system, which has dominated the fashion industry for over 70 years, has already been mostly obliterated. Could the radical overhaul of resale make the supply chain model next? If the recent #ditchyourstuff trend is one to go by, then brands should probably be on high alert.





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