#mavericksindigital: China, key to the global luxury market
This past week we saw the launch of the first leg of London Fashion Week (LFW). This event is held twice a year where everyone who’s anyone in the fashion scene is in attendance to get a glimpse of what’s hot in fashion this year.
A theme that is increasingly growing with each year is the emergence and continual focus on the Chinese consumer and how important these brands need to understand them. To put it in perspective, in 2014, China accounted for more than 30 per cent of luxury purchases globally and by 2020 this figure is slated to be north of 50 per cent. And not only do Chinese lead in global purchase reach, but also in per transaction spending, currently hovering around USD 1,130.
With the overall luxury sector flattening out, brands are looking to China to help boost growth. And the key for these brands is to more aggressively engage in digital. However, most are currently far behind where they need to be.
In a 2014 report by L2, titled ‘Luxury China’, they looked at 100 luxury brands in China and ranked them by their digital IQ looking at areas like website and e-commerce, social media, digital marketing, and mobile. In their ranking, only three brands achieved the status of genius – Chow Tai Fook, Tommy Hilfiger and Coach. The rest of the 97 brands were spread out across the other ranks of gifted, average, challenged and feeble, of which the majority of brands fell into.
Of these brands, only 49 per cent had mobile optimised sites. Which is in stark contrast to how people are actually searching in China. Around 70 per cent of luxury and fashion related queries are done on mobile, stressing the importance of having a mobile optimised destination.
Similarly, only 6 brands on the list were mobile-commerce enabled. This again is strange given that China is now the largest ecommerce and smartphone market in world, taking the top position from the US back in 2013.
The stand out areas that put Chow Tai Fook, the Hong Kong based jewelry brand, into the winning position were the following:
- a user-friendly site with strong product customisation
- loyalty programs that incorporated elements of gamification
- robust multichannel and O2O integration with retail
- solid mobile-commerce setup
- strong SEO rankings on China’s top search engines and finally
- active on Alibaba’sTmall ecommerce platform.
The report also saw a 51 per cent year-on-year increase of the luxury brand presence on WeChat, the hugely popular messaging app that now commands almost 500 million active users.
One brand that does understand the power of the Chinese consumer and has taken aggressive steps to appeal to them is Burberry. At last year’s LFW, Burberry teamed up with WeChat to stream live footage of the catwalk and to distribute branded content to its VIP community. Burberry also has a strong mobile strategy complete with an m-commerce offering across its site and via their popular mobile app. And to round it out, they are also active on paid and organic search, has a strong mix of global and local content and is getting more into multi-channel, leveraging their robust digital community into their retail environments.
To sum it up, China will continue to be a central focus for luxury brands moving forward. And digital will be the underlying channel that will make or break a brand in that market. Brands who are new should take a lesson from Burberry, Coach and the limited others who have put China at the heart of their strategy.
