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On Friday 18 December, Kering’s iconic brand and China’s largest e-commerce platform announced their new alliance in a joint press release. Analysis of a market segment that is not experiencing the crisis.
Once again, the impact of the health crisis on the luxury sector is pushing luxury brands to adopt new strategies and experiment with new methods. All the houses, without exception, are therefore turning to the Chinese market, the main growth vector for luxury goods, since China is the only country to have recorded growth this year.
But then how is it that the Chinese luxury market is experiencing the opposite phenomenon to the other luxury markets when it has been massively impacted by the crisis ? Its growth of 45% is firstly due to the fact that the country is the first to have known after its confinement an economic recovery generated by the rush of Chinese consumers in luxury boutiques.
Secondly, it is the consumers who dictate the market, and in China these consumers are mostly the new and younger generations. Who says young generation says social and digital networks, and in China it’s e-commerce and social networks that are exploding the numbers, since the former has enabled a 48% increase in luxury sales in China. So if we bring together all the factors : pandemic, Chinese market, millenials: luxury is inevitably heading towards a digital revolution if it wants to face the crisis, more precisely towards Chinese e-commerce and can no longer afford to be reticent about it.
Gucci was then one of the last houses, along with Louis Vuitton and Hermès, to work on its own in online sales in China, with its own Chinese online shop created in 2017. But the big house has joined its competitors by joining forces with the e-commerce e-commerce platform Alibaba on which it will open 2 virtual shops in the coming weeks. Both shops will be located in Alibaba’s space dedicated to luxury : the Luxury Pavilion and will each be dedicated to a category. The first, which will be launched on 21 December, will sell clothing and leather goods online and the second, which will be launched in February 2021, will sell beauty products.
Kering’s flagship house had already made use of the Chinese digital world in 2019, when it launched virtual pop-up stores on WeChat and joined forces with Tencent.
The reluctance of Gucci, and indeed other brands, to ally themselves with Alibaba stems from the controversy in 2016 over the numerous counterfeits that were sold on Chinese platforms. This had therefore led Kering to accuse the Alibaba platform of promoting counterfeiting. But the complaint by Gucci, Yves Saint Laurent, Balenciaga and other brands of the group had been rejected by the American courts.
But after having eliminated all traces of counterfeits and to make up for their reputation on their platforms, the Chinese e-commerce giants have decided to create platforms within their own, specific to luxury. These specific portals have been able to regain their confidence by allowing the houses to distinguish themselves from mass products by being sold outright.
As mentioned above, Gucci is not the only brand to have succumbed to the temptations of the Alibaba platform : Burberry, Givenchy, Hugo Boss, and Guerlain each launched their virtual boutique there in 2017. Saint-Laurent, Balenciaga and Emporio Armani have chosen to set up on the second Chinese platform : JD.com which has dedicated the Toplife platform to luxury brands and allows them to publish their e-flagship.
The health crisis then pushed luxury brands to change their priorities : they focused firstly on the number of sales and secondly on the image of the brand. Indeed, even if the platforms have innovated in order to distinguish luxury from mass trade, the sale of luxury products on this kind of platform can clearly harm the brand’s image. The brand necessarily loses its exclusivity, its rarity, and its quality can easily be called into question given the reputation of Chinese commerce and its reputation for counterfeiting.
Read also > ALIBABA : THE EXPLOSION OF LUXURY SALES DURING THE SINGLE DAY 2020
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On Friday 18 December, Kering’s iconic brand and China’s largest e-commerce platform announced their new alliance in a joint press release. Analysis of a market segment that is not experiencing the crisis.
Once again, the impact of the health crisis on the luxury sector is pushing luxury brands to adopt new strategies and experiment with new methods. All the houses, without exception, are therefore turning to the Chinese market, the main growth vector for luxury goods, since China is the only country to have recorded growth this year.
But then how is it that the Chinese luxury market is experiencing the opposite phenomenon to the other luxury markets when it has been massively impacted by the crisis ? Its growth of 45% is firstly due to the fact that the country is the first to have known after its confinement an economic recovery generated by the rush of Chinese consumers in luxury boutiques.
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On Friday 18 December, Kering’s iconic brand and China’s largest e-commerce platform announced their new alliance in a joint press release. Analysis of a market segment that is not experiencing the crisis.
Once again, the impact of the health crisis on the luxury sector is pushing luxury brands to adopt new strategies and experiment with new methods. All the houses, without exception, are therefore turning to the Chinese market, the main growth vector for luxury goods, since China is the only country to have recorded growth this year.
But then how is it that the Chinese luxury market is experiencing the opposite phenomenon to the other luxury markets when it has been massively impacted by the crisis ? Its growth of 45% is firstly due to the fact that the country is the first to have known after its confinement an economic recovery generated by the rush of Chinese consumers in luxury boutiques.
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