This week in the news, Sephora sets up shop on JD.com, London has become the center of Chinese fashion, Alibaba invests in Zulily to gain insight into the U.S. market, The Met’s new China exhibit explores China’s influence on Western style, and Hugo Boss is the latest luxury brand to feel the pinch of China’s spending slowdown.
LVMH-owned cosmetics retailer Sephora has partnered with JD.com to open the largest cosmetics store on the e-commerce site. Sephora will offer more than 1,200 products from 70 top brands, including Christian Dior, Givenchy, and Kenzo. Though Sephora has a network of retail stores across mainland China, JD’s logistical support will be invaluable for the company. JD has 123 warehouses in 40 Chinese cities with 3,210 delivery and pick-up centers. This will allow Sephora to ship its products with JD’s guaranteed same-day delivery in 134 districts and next-day delivery in an additional 866 districts. Jumei.com and Alibaba’s Tmall, which has 19 high-end beauty brands on its platform, are Sephora and JD’s chief competitors in China’s booming beauty market.
Greater China is falling short in the development of its fashion industry as more and more Chinese designers are looking to London for their big break. Hong Kong’s government recently announced that it would invest HK$500 million to develop a pilot program to support its fashion industry. The program, which has been approved for an initial three years, will create an incubation program for design start-ups, provide opportunities for overseas study and internships, and promote local brands. Hong Kong’s move to improve its fashion industry may be too little too late, as droves of fashion students from greater China are enrolling in the world-renowned London fashion schools.
Alibaba has purchased a stake in Seattle-based e-commerce site Zulily, a move that could hint at bigger plans for the U.S. market. Zulily sells clothing, home decor, toys, gifts, and other merchandise that is aimed primarily at moms through flash sales, which offer deep-discounts for a very limited amount of time. Alibaba has no intention of fully acquiring Zulily. Instead, this investment seems to be a way for Alibaba to learn more about the U.S. market and form relationships with U.S. vendors. Zulily recently fell short of Wall Street estimates, and its business model may be responsible for this issue. The company sells products on the website before placing the orders with vendors, which results shipping times of two to three weeks to reach customers.
A new exhibition at New York’s Metropolitan Museum of Art showcases China’s centuries-long influence on Western style. China: Through the Looking Glass features 500 years of European luxury goods, including a Roberto Cavalli evening gown and the 14th-century Ming dynasty vase that inspired its blue-and-white pattern, along with Paul Poiret’s 1911 hobble skirts, an odd Western fusion of East Asian and Middle Eastern styles. The wide range of items on display demonstrates the complex and colorful relationship Western fashion has had with Eastern art and design. East Asian consumers are demanding more products from Western brands that reflect their cultural heritage. Hermés, for instance, launched a label called Shang Xia in 2008 which “utilises ancestral Chinese crafts in contemporary objects.”
The company announced that net profit fell 7 percent to €75.6 million, well below analysts forecast of €82 million. In China, first-quarter sales fell 3 percent. Last year, menswear sales in China, its most important category, fell 10 percent, according to Reuters. Hugo Boss blamed its disappointing sales figures in China on the luxury spending slowdown in the country. According to estimates from investment bank J.P. Morgan Cazenove, between 20 and 40 percent of all luxury sales in mainland China are now parallel. Despite these negative sales factors in China, Hugo Boss remains confident about the coming year, as the company has implemented strict inventory management and plans to open 50 new stores.
image credit: met museum