This week in the news, Estée Lauder recently opened its largest Travel Retail flagship at Haitang Bay, the Chinese haven’t fallen out of love with luxury, Victoria Beckham looks to expand her brand in Asia, luxury brands can learn from Burberry to woo Chinese during fashion week, and retail expansion in China should be a lower priority for luxury brands.
Estée Lauder’s recent opening of its largest flagship store in Travel Retail Worldwide at Haitang Bay, Sanya shows the company is serious about catering to local preferences at its new stores. Combining navy and gold tones with hints of platinum, the design of the flagship store takes its cues from Estée Lauder’s heritage and is designed to immerse consumers in the “luxury and modern glamour” of the brand. For the Haitang Bay store, not only has Estée Lauder created cutting-edge displays to educate customers, but the company has also made sure that customers’ desire to be pampered and receive additional personal attention will be met. The store offers complete consultations at the in-store Beautiful Skin Studios and at the Re-Nutriv Lounge.
Fortune Character Institute, a research center based in Shanghai, recently reported that luxury purchases within China decreased by 11 percent to $25 billion last year. But overseas spending by Chinese consumers is on the rise, with a 9 percent increase to $81 billion reported for 2014. Consultancy firm Bain & Company also reports that consumers traveling overseas accounted for 55 percent of luxury spending last year, and that purchases through relatives, friends, and professional agents called daigou made up another 15 percent. Chinese consumers now account for 29 percent of luxury spending worldwide. The entire global luxury market is worth $250 billion.
After a well-received New York Fashion Week show, Victoria Beckham announced that she would be opening a second brand-owned store in Asia, and China is the logical choice. Beckham is no stranger to the Chinese market, having partnered with Lane Crawford Hong Kong and unveiling a limited edition Land Rover at the Beijing Auto Show in 2012. What’s more, Victoria has accompanied her husband to China a number of times for engagements related to his Beckham global brand and his role as brand ambassador for Haig Club scotch and Jaguar Land Rover. Making China even more attractive is the fact that the country is expected to overtake the United States as the world’s largest retail market by 2018, in addition to its title as the world’s largest e-commerce market.
With 300 million shoppers making a purchase on a mobile device in China last year — a 35 percent year-on-year increase — having a strong mobile presence is a requirement for success for luxury brands in China. Burberry is the shining example of the power of a strong online and mobile presence in China. For its London Fashion Week Autumn/Winter 2014 fashion show early last year, Burberry teamed with WeChat to offer fans an immersive fashion experience. Now, Burberry has teamed up with Line, a Japanese messaging and free calling app with 170 million users, to stream its London Fashion Week womenswear show on mobile devices and push exclusive content and “emoji-style stickers” to fans.
Last year, luxury spending decreased 11 percent year-on-year to $25 billion, but luxury consumption outside of China has been growing in turn. High taxes on luxury products sold in China have long been a barrier for consumption. This is now compounded by a government anti-corruption campaign, which has dampened purchases of luxury items once given as gifts on the mainland. Slowing economic growth is also a factor impacting the purchase of luxury goods. Recent data from HSBC shows that Chinese consumers make around two-thirds, or 66.6 percent, of their luxury purchases outside of the Mainland. Fortune Character also reports that during last year alone, consumers from the Mainland made 76 percent of their luxury purchases while traveling outside of the country.
image credit: chris