In Case You Missed It…Week In Review August 4-8

on August 9 2014 | in Week in Review | by | with No Comments

China, Coach, e-commerce, online store

This week in the news, Parisian hotels are looking to attract Chinese tourists, luxury brands have four options when tackling Chinese e-commerce, China continues to shine for Coach, some luxury brands are being left behind in China’s e-commerce boom, and China’s beauty industry is soaring.

Parisian Luxury Hotels Pursue and Are Pursued By the Chinese

Qatar’s Katara Hospitality and The Hong Kong and Shanghai Hotels Group recently launched the Peninsula in Paris. Of the 30 billion visitors Paris attracts each year, nearly 40 percent of them are from overseas, and a large number are Chinese. Due to their title as the world’s biggest luxury spenders, The Peninsula and other hotels in Paris are looking to woo Chinese guests. Chinese spending in France rose more than 20 percent over the previous few years, though it is up only 14 percent for the first six months of 2014. The Peninsula is now one of a group of five-star hotels in Paris—56 in total—that are owned by foreign investors. The Hong Kong-based Shangri-La Asia Ltd. and the Mandarin Oriental International Ltd. also opened hotels in Paris in 2010 and 2011.

Four Ways Luxury Brands Are Building Their Online Business in China

A study by Exane BNP Paribas has found that luxury brands have four options when tackling China’s e-commerce market. The first option for luxury brands, which 17 percent of brands use, is a directly operated Chinese e-commerce site, as companies such as Coach and Hugo Boss operate. However, this option can be fraught with difficulty due to China’s firewall. The second option is a single-brand Chinese e-commerce store administered by a third-party within China, which makes up 17 percent of international luxury brand e-stores. The third option is the creation of a global e-commerce website that will deliver to China, and the fourth option is to set up a store on a third-party platform such as Tmall, which 7 percent of brands currently do.

China Continues to Shine for Coach

Coach’s fourth quarter earnings got a boost from men’s goods and China, which offset weakness in the company’s North American women’s business. China sales increased by 20 percent in the quarter compared to the same period a year ago, helped by double-digit growth in comparable store sales. For the year, China sales jumped by 25 percent to US$545 million, accounting for about 10 percent of total sales. With plans to expand into tier 3 and tier 4 cities, Coach projects China sales to rise by 10 percent in the year ending June 2015. Luxury companies, such as LVMH, have been hurt by a shift away from conspicuous spending among Chinese luxury consumers and growing competition from mid-tier aspirational brands such as Coach.

Which Luxury Brands Are Left Behind in China’s E-Commerce Boom?

A new study by Exane BNP Paribas examined ten of China’s top multi-brand e-commerce websites and compared international luxury brands by the number of these sites on which they can be found. Among soft luxury companies, Burberry leads the pack with items for sale on 10 multi-brand e-tailers in China, including Secoo, Yintai, and Chloe, Dolce & Gabbana, Gucci, and Tod’s rounded out the top five with products for sale on all ten websites. Hard luxury companies—watch makers, jewelers, and pen makers—have not embraced e-commerce in China as enthusiastically as the soft luxury brands have. Tied with a presence on seven multi-brand e-commerce websites each are Cartier, Longines, Montblanc, and Omega.

The Driving Force Behind China’s Beauty Boom

The Chinese social concept of mianzi (face) stresses that a person’s outward appearance should reflect his or her status. This idea has considerable currency in contemporary China’s middle class. Whitening cosmetics are most popular, followed by China-centric hydration products, which now account for nearly a third of all facial moisturizer sales in the country. On average, white collar Chinese women spend about 30 percent of their total income on cosmetic products and treatments. China’s grooming sector is currently the second largest in the world after South Korea, and grew by 29 percent between 2009 and 2014. Overall, Chinese consumers spent US$25.9 billion on beauty products in 2013 alone.

image credit: appnova

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