Issue No #01 2018
Issue No
#01
LUXURY REVIEW Greater China
[ 1 ] Welcome.
Our quarterly Luxury Review has been given a new look. We aim to bring our
What started as a passion project has grown readers the must-know to a must-read for industry insiders in China and beyond, and it’s only fitting that we facts and insights about the evolve our publication accordingly. luxury industry We have updated the format to accommodate time-pressed readers. We’ve introduced Quick Takes – short form articles to give you a recap of the key happenings in the luxury industry over the past quarter. You will still find our POV and analysis through longer reads in the second section. We have also merged our two editions into one bilingual issue. We will continue to cover trends, brands, and products having an impact on the Greater China region, from categories ranging from fashion and beauty to travel and auto – and wherever luxury will go next. We hope to continue to give you market knowledge and insights that will help guide your luxury communications strategy. Thank you for reading. Mindshare
[ 2 ] Welcome.
[ 3 ] Content 010 – Quick takes 011 – Campaigns 012 – Product Launches 013 – Business 014 – Content 015 – Technology 020 – Mindshare’s POV 021 – Chinese firms acquiring luxury brands 022 – Beauty is boosting speed to market 023 – WeChat’s new ad format 024 – Is J-Beauty the new K-beauty? 025 – Volvo’s luxury pivot brings recognition 026 – How can luxury brands thrive in today’s digital landscape?
[ 4 ] TheQuick news Takes you need to keep up with luxury
[ 5 ] CAMPAIGNS
Chanel Mademoiselle Privé Exhibition Following two successful editions in London in 2015 and in Seoul last year, Chanel’s “Mademoiselle Privé” landed Hong Kong in early January this year. The four-week exhibition was free of charge and held at PMQ, Hong Kong’s creative hub.1 This exhibition not only offered an immersive look into the origins and sources of inspiration for Chanel’s designs, but also captured the unique personality and spirit of Gabrielle “Coco” Chanel and Karl Lagerfeld. Mademoiselle Privé International stars like Pharrell Williams, Kaia Gerber, Caroline de Maigret and Park Soo Joo P 1 were invited to the event.2 Mademoiselle Privé M Q d In order to enhance the visitor experience at the 3 exhibition, Chanel launched an app for both IOS P 3 and Android mobile phones. In it, guests could Gabrielle ”Coco” Chanel PKarl book their time slots to the exhibition, preview Lagerfel Pharrell content and register for workshops held within Williams Kaia Gerber P Park 3 the exhibition area. Soo Joo 2 d 3 3 IOSPAndroid 2 1
1 http://www.scmp.com/magazines/style/news-trends/article/2124803/chanels-mademoiselle-prive-exhibition-set-hong-kong 2,3http://www.scmp.com/magazines/style/fashion-beauty/article/2126819/6-things-know-about-chanels-mademoiselle-prive [ 6 ] CAMPAIGNS
Stella McCartney on Tmall Space Stella McCartney Stella McCartney launched a flash sale store on Stella McCartney Tmall Space under Luxury Pavilion. It is the Luxury Pavilion Tmall Space second brand testing the platform following Loewe Spanish fashion brand Loewe launching its Tmall Space limited-edition handbag in Tmall Space last Luxury Pavilion August. Luxury Pavilion is exclusively open to VIP 3 Tmall VIP customers, attracting big-name luxury 2018 brands. The pop-up sale lasted one month, offering the 2018 Spring/Summer collection, 8 4 including some products even unavailable in Luxury Pavilion Luxury Pavilion stores in China.4 The brand also offered coupons and gifts to drive sales. A brand page was Tmall Space created on Luxury Pavilion to introduce the brand 5 Falabella GO story and the new arrivals of this collection. Right 5 after the Tmall Space campaign, the brand worked with e-commerce website VIP.com to introduce 3 Falabella GO collection backpacks. VIP.com is the only authorized retail channel for these bags in China.5
4 http://tech.sina.com.cn/roll/2017-12-17/doc-ifypsvkp3843876.shtml 5 http://mini.eastday.com/mobile/180114001406363.html Image source: Screenshot from Tmall Luxury Pavilion [ 7 ] BUSINESS
There have been several noteworthy appointments 6 in the fashion industry V Dior Homme Saint Laurent Hedi Slimane recently, most involving Céline 0 H Sidney Toledano 0Hedi talent linked to LVMH. Slimane M 7L Céline Burberry Riccardo Tisci 7 Givenchy Hedi Slimane, previous designer of Dior Homme and Saint Laurent, is to take over at Celine as Tisci the new artistic, creative and image director. Burberry Sidney Toledano, Chairman and CEO of LVMH Kim Jones Fashion Group commented in a press release 2 that he views Hedi Slimane as an exceptional Dior Jones 8 designer and expects him to “lead Celine to ever M V greater success through his renowned creative LV x Supreme Jones energy and discipline.“6 21 Kris Van Assche Dior Homme 6 6 Burberry also welcomes a new creative officer, Riccardo Tisci, who just finished his career at Givenchy last year. He led the creative direction of the LVMH-owned brand for more than a decade. In his new role, Tisci will be based in 8 London and take charge of all Burberry’s collections.7 After Kim Jones’s last runway show for Louis Vuitton at Fall 2018 Men’s Fashion Week in Paris, he is exiting the maison to join another LVMH brand: Dior. Jones has held the position of men’s artistic director at Louis Vuitton since 2011 and is the brain behind commercial successes such as LV x Supreme. At Dior Homme, Jones replaces Kris Van Assche, who is stepping down after eleven years at the helm.8 People come, people go, but the fashion carrousel never stops.
6 https://www.lvmh.com/news-documents/news/hedi-slimane-named-artistic-creative-and-image-director-of-celine/ 7 https://www.businessoffashion.com/articles/news-analysis/riccardo-tisci-is-the-new-creative-director-of-burberry 8 https://www.businessoffashion.com/articles/news-analysis/kim-jones-to-exit-louis-vuitton [ 8 ] Coach launches SCRM a Coach has released a Social Customer CoachP2017 a SCRM Relationship Management system called Weclient Pa “Weclient,” to activate 1-on-1 online client - service.9 Coach o 9 This app links to Coach‘s WeChat account. The A customer can scan his/her individual service advisor‘s QR code via WeChat, and follow the WeclientC Coach‘s official account to receive exclusive c c online client service. Weclient takes advantage h - 9 of its social network function to understand 9 - - customer needs, and also brings 1-on-1 c professional services to enhance distinguished experience. At the same time, the customers can book offline service online, and offline service can also leverage traffic back to online, in which online and offline experiences seamless integrated to increase the overall sales conversion rate.
9 http://socialbeta.com/t/102102 [ 9 ] Luxury brands dominate the inaugural BrandZ 1 French BrandZ ranking WPP agency Kantar Millward Brown revealed their BrandZ ranking of the 50 most valuable Kantar Millward Brown BrandZ French brands. With France being the birthplace 500 of traditional luxury, it comes as no surprise that the list is dominated by luxury brands, and in affect presents a view of the brand health of the 1 luxury leaders., The ranking is topped by Louis Vuitton and Hermès, with Chanel at number 5, 1 Lancôme at number 7 and Cartier at number 8.10 88,900 3550 0 The luxury category has a combined brand value 50 15 of US$88,9 million. Louis Vuitton alone accounts for 15% of the total brand value of the Top 50 50 1 with a brand value of $US35,5 million. Dior, Saint P Laurent, Moet & Chandon, Sephora, Givenchy, W Martell & Guerlain all make the top 50. 5 Brand contribution measures the influence of brand alone in the mind of the consumer. It’s considered a key driver of business growth. Lancôme, Chanel, Louis Vuitton, Veuve Cliqout, all achieved the highest possible score of 5.
10 BrandZ Top 50 Most Valuable French Brands 2018 Image source: http://www.wpp.com/wpp/press/2017/dec/06/luxury-dominates-first-brandz-top-50-most-valuable-french-brands-2018- ranking/ [ 10 ] Chanel and Farfetch announce partnership Farfetch Chanel have always been reluctant to engage in e-commerce, slowly experimenting with different ways to approach the channel, from offering its Net-A-Porte beauty products on their standalone e-commerce to limited e-tailer partnership with Net-A-Porter for its jewelry line. Therefore the announcement r Farfetch of a partnership with e-commerce giant Farfetch is somewhat surprising. The partnership is said Farfetch to focus on augmenting the brick-and-mortar Farfetch 1 experience of their stores through Farfetch’s data platform, and will not make Chanel products available on Farfetch’s online platforms. Farfetch The long-term partnership will see Chanel Bruno Pavlovsky investing in Farfetch, and initial trials will roll-out in France later this year. Judging by comments made to BoF by Bruno Pavlovsky, Chanel’s president of fashion, we can expect a range of Farfetch digital services which will link consumers to the boutiques, such as appointment services and product reservations.11 Farfetch have previously demonstrated parts of their “Augmented Retail” programme, including digital mirrors, automatic wishlists and advanced consumer recognition.
11 https://www.businessoffashion.com/articles/fashion-tech/chanel-strikes-farfetch-deal-to-augment-boutiques [ 11 ] Airbnb is stepping into luxury hospitality Airbnb Airbnb China has announced several new Airbnb services catering to affluent audiences, effectively positioning themselves as a more Airbnb direct threat to luxury hotels. Properties on the Beyond Airbnb Airbnb site which fulfill certain upscale criteria will be highlighted under the section Beyond Airbnb. This will make luxury rental options discoverable in a way they weren’t before.12 Airbnb Plus 100 2 The other service, Airbnb Plus features 200 100 properties which have fulfilled a 100-metric long list of specific demands. These rooms will be pricier, with an average of US$200 per night vs Airbnb 3 US$100 for standard properties. This will reassure picky consumers on the quality and facilities of the place. Currently properties are Airbnb 2020 1 qualified by type: entire homes, shared spaces, and private rooms, but Airbnb will also introduce new classifications which are more intuitive for users when searching: boutique hotels, bed-and- breakfasts, vacation homes, and distinctive properties. Airbnb estimates that China will be their largest market by 2020, and these initiatives should make the site friendlier to affluent Chinese consumers’ needs.13
12,13 https://jingdaily.com/airbnb-introduces-high-end-offer-pivot-towards-china [ 12 ] QUICK STATS
64% say their purchase 93% of Chinese millennials attitude is to follow their plan to buy more luxury opinion, while they cite goods in the near future media being as influential as friends opinion
Planning to buy more luxury Attitude towards purchasing 14 products in the next 3 years luxury goods14 100% 100% 7 7 14 80% 80% 40 15 60% 60%
40% 40% 53 64 20% 20%
0% 0% Millennials Not picky Influenced by friends Strongly agree Agree Disagree Influenced by medias I just follow my opinion
14 Data sourced from Bain & Co 2017 China Luxury Market Report (sample=520) [ 13 ] QUICK STATS
64% 93%
100% 100% 7 7 90% 90% 14 80% 80% 40 70% 70% 15 60% 60% 50% 50% 40% 40% 30% 53 30% 64 20% 20% 10% 10% 0% 0%
Data sourced from Bain & Co 2017 China Luxury Market (sample=520) http://www.bain.com/about/press/press-releases/china-luxury-report-2018.aspx [ 14 ] PRODUCT LAUNCH
Natasha Denona beauty hits Greater China Natasha Denona Natasha Denona, the brand created by the Natasha Denona Natasha Denona eponymous makeup artist, is the latest cult beauty brand built on the reputation of a professional makeup artist to be picked up by Sephora. Pat McGrath Huda Beauty 0 1 Similar to Pat McGrath and Huda Beauty, the 0 brand focuses on high-quality products with 5 0 strong colors, straddling the space between professional and personal use. It doesn’t come cheap – her famous eye palette retails for the 2 equivalent of US$250. The full range includes brush sets, foundation, contour products, as well as eye and lip makeup. Through a distribution deal with Sephora the brand can now be found in Hong Kong, as well as select other APAC markets including Singapore and Australia.15 Sephora tends to puts significant merchandising power behind its exclusive brands, so we expect the brand to receive plenty of trade support.
15 https://www.sephora.hk/brands/natasha-denona [ 15 ] New product trend: sheet masks for hair While sheet masks for your 1 face have been quite Redken Løre Originals popular for their convenience for the past years, hair sheet masks are 7 only now starting to hit the beauty scene. Redken All Soft Mega Recovery Sheet Mask and 6 Løre Originals Legend Dry Hair Mask are two 6 premium products recently launched, to rave reviews from beauty editors. The key benefit of a hair sheet mask is convenience, as traditional leave-in hair treatments tend to leave a mess on pillows or towels. The hair sheet mask is similar to a shower cap with intense treatment that you wrap your hair in after applying shampoo, leave for a few minutes and rinse out.16 Just like most face sheet masks, hair sheet mask is single use. Hair sheet masks are designed to hydrate and soften your hair especially during winter, when hair is dry and dehydrated.17 You can already find options for different hair length and hair types to match unique hair needs. The existence of hair sheet masks shows that the hair-care industry is following the same innovation seen in skincare, with its constant advancements and new product types.
16 https://www.lorealparisusa.com/beauty-magazine/hair-care/damaged-hair/how-to-use-hair-sheet-mask.aspx 17 https://www.refinery29.com/2018/02/191687/sheet-masks-for-hair?bucketed=true [ 16 ] The hair-care industry is adopting the same innovation as skincare, with constant advancements and new product types
[ 17 ] CONTENT
Prada – The Postman Dream II Prada —— 2 Over the past 3 months, Prada released its The 2015 12017 Postman Dream 2 series, which includes 4 short r1Prada 1 P movies, for its Galleria handbags. After 2015's Galleria Prada "The Postman Dreams" short film series, Prada Galleria 8 1Elijah Wood released the "The Postman Dreams II" in late 8 1P ae 8 1 2017. With Prada Galleria handbags and a 1 mysterious postman (played by Elijah Wood) as 2 1 main characters, four short films were launched , i 1 to present the theme of desire and sense of pleasure, namely "The Bogey", "The l 1 Troublemaker", "The Punch" and "The Elevator." The first is about an "uninvited guest," a postman 1 d G who interrupts filming and sends a gift handbag 1 2 to the actress. The second illustrates the postman chasing the handbag recipient, staging a cat and mouse game. Short film three presents a conflict between lovers, in which the woman punches the man and meets her Prada Galleria, while the last story takes place in the elevator where the postman accidentally sends out the parcel, triggering a surprise party.18
18 http://socialbeta.com/t/101985 [ 18 ] QUICK STATS
Luxury brands are increasingly using their WeChat Official Accounts to offer services
Official account features among Top 40 luxury brands on WeChat (%)19
100 90 80 70 60 50 100 90 40 30 65 55 50 20 38 10 0 Product info Boutique info Customer WeChat Brand info CRM service store Product info Boutique info Customer service WeChat store Brand info CRM
19 Data sourced from Bain & Co China Luxury Market Report 2017 [ 19 ] QUICK STATS
40 19
100 90 80 70 60
50 100 90 40 30 65 55 50 20 38 10 0
Sourced from Bain & Co China Luxury Market Report 2017, Ladymax data [ 20 ] TECHNOLOGY
Chinese consumers account for 32% of global luxury sales
Alipay and WeChat now offer instant tax refunds 1 This January, Alipay announced that Chinese 8 0 tourists traveling to Singapore can get tax refunds immediately through Alipay now.20 They will get the refund directly into Alipay account by 2 scanning the QR code and finishing the whole 20 procedure at counter in the airport. Singapore is the first country in Southeast Asia providing this 1 service. This move follows Alipay’s move providing instant tax refunds in 20 countries 2018 worldwide including airports and department stores. 32 WeChat has collaborated with tax refund companies as well, offering instant tax refund in Spain this year. It’s said more countries will join the game in 2018.21 According to Bain & Co, Chinese consumers account for 32% of global luxury sales, yet only 8% of luxury sales are made in China.22 The launch of instant tax refund is a wise strategy to compete for more market share of tax refund service overseas.
20 https://jingtravel.com/global-tax-free-rolls-out-instant-tax-refund-through-alipay-in-singapore/ 21 https://www.dfnionline.com/latest-news/global-blue-implements-wechat-refund-service-in-madrid-03-01-2018/ 22 Bain & Co China Luxury Market Report 2017 [ 21 ] CES 2018: Made in China 2018 The 2018 Consumer Electronics took place in 2018 CES Las Vegas on 8 January. Not surprisingly, the 22018 1 8 exhibits included AR, VR, AI, Blockchain, Roll up AR VR TVs, Nano technology and much more. AI Rather than being sidelined to a minor role as in previous years, Chinese exhibitors outrivaled , their American, Japanese and South Korean counterparts when they displayed some best-in- class products, becoming this year's eye- catchers. Almost a third of the exhibitors at CES 500 2 this year were Chinese companies; 500 companies had the word ‘Shenzhen’ in their name. Byton 3 Alexa Google Assistant Baidu, Huawei and Alibaba were joined by new , players such as electric car company Byton.23 The battle of Alexa vs Google was a harbinger for things to come in China. Voice is starting to 2 take over and we can expect to see more similar 2018CES products by Chinese players. BBC TechCrunch For a roundup of some of the coolest tech at CES 2018, you can read the summaries on the BBC, Forbes or TechCrunch.
23 http://www.bbc.com/news/topics/cpmeg4m662nt/ces-2018
[ 22 ] K11 invests in AI to enhance retail experience K11 Adrian Cheng’s K11 invested $10 million in an AI 4 K 6 K11 star-up ObEN. ObEN is an artificial intelligence K ObEN 1000 Oben (AI) company building a decentralized platform 5 6 for intelligent avatars.24 The company was AI 2014 founded in 2014 and it has raised over $23.7 ObEN 2 K million so far. With ObEN’s technology, users are 5 1 able to create their own intelligent 3D avatars ObEN K that look, sound and behave like them. ”With this Nikhil Jain K11 strategic investment, K11 will be able to reach 4K D millions of new customers and create ObEN 5 PAI experiences that will shape the future of retail,”25 5 1 says ObEN co-founder/chief executive Nikhil 0 Jain. ObEN’s Personal AI (PAI) concierge allows K11 3 consumers to get real-time message and 6 customized shopping suggestions and even ObEN PAI K integrate with a celebrity’s avatar. The K11 technology will be available early 2018 at the K11 PAI 7 Shanghai K11. “ObEN’s PAI platform simplifies the implementation of artificial intelligence technologies for real life applications,” said Adrian Cheng, founder of K11. “K11 is committed to localizing the PAI platform and bringing an immersive AI experience for visitors at all K11 projects.”26
24,25,26 https://www.businesswire.com/news/home/20180109005393/en/ObEN-Raises-10-Million-K11-Bring-Immersive [ 23 ] OurMindshare analysis of thePOVs defining market trends
[ 24 ] MINDSHARE POV
CHINESE FIRMS ACQUIRING LUXURY BRANDS
Chinese groups have been demonstrating some serious cash flow recently, going on a shopping spree for small to mid-size heritage luxury brands.
[ 25 ] The conglomerate Fosun has bought Lanvin, one d va d va of the oldest French luxury brands. The label has k kWnd w been struggling since the departure of Alber P Elbaz in 2012, due to differences in opinion over k f gW strategic direction with Taiwanese owner Shaw- 06CK CP A7 G ,A76 m Lan Wang. Although sales have been declining, m the brand value itself suggest potential for a W z P W revamp à la Celine or Givenchy, with the right y u business and creative leadership. Fosun has A C K C8 MW a also bought luxury lingerie brand Wolford, P following a failed attempt to take over their 06 2 GA6 k l competitor La Perla. As we’ve mentioned in 5 A G P t previous issues year, underwear is one of the d a fastest growing fashion segments in China with d gWP huge potential. rd va Other takeover examples include those of k 6GA 06 G A d Septwolves which last year acquired 80% of Karl u b i Lagerfeld Greater China Holdings, the owner of rt a Prt j k Karl Lagerfeld trademark in China, worth $US36 6AAM P million; and Shandong Ruyi, who are rapidly W expanding their fashion business. They recently Prt d bought a controlling stake in Swiss leather and k a P footwear brand Bally. 27 Most known for their all- b k weather boots, the quintessentially Swiss brand K H .6L H 6H8 B has been looking for a cash injection to 31 2 p accelerate growth. They have over 50 stores in 36C G 16 A6 2 GA P China already, as well as e-commerce rt Wc e operations already in place. Shandong Ruyi i k already owns the nearly 250-year-old UK suit o P maker Gieves & Hawkes, British high end apparel brand Aquascutum, and the French tg S 6E H GM group SMCP which includes the fashionista 1 8 6 A GHT s favorites brands Sandro, Maje & Claudie lP qd hi k Pierlot.28 Ruyi’s investment strategy suggest they lP n have big plans for a fashion group, having also kWc d a invested in wool and textile producers in the past P three years. We’ve previously discussed how American groups like Tapestry and Michael Kors might be attempting to grow luxury groups sizeable enough to compete with the French. Now China seems to be entering the playing field as well. These strategic investments and acquisitions send a clear message that China is a luxury force to be reckoned with.
27 https://www.ft.com/content/5a349e56-0da8-11e8-8eb7-42f857ea9f09 28 https://www.businessoffashion.com/articles/news-analysis/chinas-fosun-buys-majority-stake-in-lanvin [ 26 ] MINDSHARE POV
IS J-BEAUTY THE NEW K-BEAUTY?
Following the boom of Korean beauty brands (K-Beauty) in China - and the rest of the world - in recent years, 2018 is shaping up to be the year of Japanese brands (J-beauty) as they are set to surpass K-beauty in popularity in China this year.29
29,30,31 https://www.l2inc.com/daily-insights/j-beauty-tops-k-beauty-in-china [ 27 ] Part of the explanation is Chinese tourist travel point in time when the national sentiment patterns. Chinese tourism to South Korea almost towards Korea is cooling. halved in 2018, from 8 million visitors in 2016 to Japanese beauty products are per se nothing just over 4 million in 2017, according to tourism new. There are many highly respected vanity statistics. Japan received 7.4 million, an increase staples from Japan, with SK-II Facial Treatment by 15%. The lack of tourists is hitting the beauty Essence being the top of mind product for many. industry hard, with Korean large cosmetics Essence, cleaning oils and fiber mascaras all groups AmorePacific faces declining sales, stem from Japan and have been around for reporting a net profit of 76% y.o.y for Q4 2017.30 ages. This time around though, J-beauty is The domino effect on brands is higher because bigger, and an overall rising popularity across they consumers see beauty products when they brands and product types is observed.34 A global travel, try it, and continue to purchase it at home, Japan hype is building much like the Hallyu hype as well as post about it on Chinese social which first took over China but later made brands media. When the visits to Korea decrease, it has like Tony Moly best sellers even in Europe and broader repercussions for the beauty brands. North America. DHC’s cleansing oil, Fairydrops As Korean brands decline, Japanese brands are mascara and Suqqu makeup brushes have been gaining more online buzz, according to available for years at niche beauty retailers L2’sDigital IQ Index: Beauty China 2018. On internationally, and will likely see a more popular shopping app Little Red Book, Japanese widespread retail footprint soon. We are brands like Pola, Fancl, SK-II and Dr Ci are witnessing the birth of “J-beauty” as a brand in receiving more attention that the average brands itself. in L2’s study; (while Korean brands like Innisfree The trend in China so far favors the premium J- and Etude House saw declining buzz y.o.y.). L2 beauty brands. Those are the ones primarily also found that SK-II demonstrated the biggest gaining in popularity. SK-II, Shiseido and Cle de growth in Baidu Index in 2017. The brand has Peu Beaute are all posed to benefit further from steadily build up interest over time with multiple this trend in 2018. As consumer tastes and campaign waves around the topic of “Change trends move in cycles, the preference for destiny” which keeps consumers interested. L2 something new and different from K-beauty isn’t also found that Shiseido, Clé de Peau Beauté, surprising. It indicates a shift to a more serious, and Aupres all saw above-average Baidu Index thoughtful and even mindful approach to beauty growth.31 and skincare. This is a bigger trend which even Another factor is the reputation that J-Beauty Western brands can leverage. enjoys. Japan is perceived as safe, classy and technologically advanced. Even British Vogue cites in its March issue that Japanese beauty has overtaken Korean as the hotbed of innovation.32 Some say J-beauty represents a more understated and traditional approach whereas K- beauty is more about showy packaging and constant novelty ingredients. However that stereotypes and simplifies both countries influences - kawaii is large subculture in Japan, and hanbang is traditional Korean medicine, based on ancient science of herbs.33 Both J- beauty and K-beauty offer mass and premium brands, new and heritage technology and products. However, Japan and Japanese brands likely creates distinct positive associations in the average Chinese beauty consumer’s mind, at a
32 http://www.vogue.co.uk/gallery/j-beauty-japanese-skincare 33 https://beautytap.com/2018/02/k-beauty-versus-j-beauty/ 34 https://fashionista.com/2018/03/japanese-beauty-brands-skincare-cosmetics-products [ 28 ] K-Beauty “ 1 “ J- “ 4 beauty “ Tony Moly 2018 DHC Fairydrops Suqqu 9 1 7 9 2018 2016 800 0 2017 4000 SK-II 7 7400 5 2018 7 AmorePacific ; 2 2016 2 3 76 9 1 L2 2018 7 2 1 “ 1 L2 Pola Fancl SK-II Dr.Ci Innisfree Etude House 1 2 L2 SK-II 2017 9 L2 7 9 9 Vogue — 3 ” ” 9 “ — 3 SK-II 9 3
Source: http://www.vogue.co.uk/gallery/j-beauty-japanese-skincare https://fashionista.com/2018/03/japanese-beauty-brands-skincare-cosmetics-products https://jingdaily.com/j-beauty-dethroning-k-beauty-china/ [ 29 ] The lack of Chinese tourists is hitting the Korean beauty industry hard
[ 30 ] MINDSHARE POV
WECHAT’S NEW MOMENTS AD FORMAT
Thus far, the most popular formats on WeChat continues to WeChat advertising have been its dominate the media standard offerings: display banners and video or static ads delivered in a user’s Moments feed. ecosystem. As of early In February Tencent launched an eye- 2018, WeChat had one catching format for Moments Ads that “flips” the creative over to billion monthly active reveal another one. This attention-grabbing ad format features larger visuals (960x960 pixels) 35 users. that invite the user to interact with it. When a user engages with the ad (e.g., “likes” it), the ad flips over to reveal something exciting, such That is the vast majority in China. It’s as an offer or an incentive. When users therefore no surprise that brands continue to share this in a chat with friends, the ad shows in flock to this platform for advertising opportunities. a card format with a high impact visual.36 Collectively, advertisers spent over RMB 11.42 billion (USD 1.8 billion) on WeChat advertising in 2017.
35 http://www.bbc.co.uk/news/business-43283690 36 http://resonancechina.com/wechat-releases-eye-catching-new-advert-format-chinese-new-year [ 31 ] TEXT HEAVY SLIDE WTH IMAGE 2
Like most new WeChat products, early access tested standard Moments Ad formats. It has comes at a cost. The premium “flip” format has a numerous additional benefits including more a minimum spending of several million compelling visuals and an added dimension that RMB. Undeterred, luxury brands including Apple, makes for deeper engagement and YSL, and Tiffany have jumped on the creative opportunities. Advertisers can link this opportunity to use it. format with other existing formats like mini- programs, which allow users to buy or interact On Valentine’s day, Tiffany ran a love-themed with the brand after they have interacted with this campaign inviting couples to share their love format and stay within the WeChat stories through this flip format. When a user environment and move further towards “liked” the ad on their feed, it would flip and purchase. give them a chance to upload a photo of themselves with their partner and stand to win a Luxury brands are more likely to adopt premium customized Tiffany frame. Results from a case formats before other brands, which sets a high study shared by Tencent showed interaction click bar for the quality of ads that users will begin to rates were much higher than average and the expect from this format. For brands, it is reverse creative (after flipping) had more than 5 an opportunity to interact with consumers, drive times higher click rate than the front-facing sales and build awareness. For consumers, it is side.37 an interesting little interaction with an ad versus the usual picture or video experience. Tencent has been very buoyant about the new format: “Various kinds of social advertising Being a rapidly expanding social platform, can offer consumers a more interesting range WeChat will always prioritize user of content and fit with their changing experience above all else, and they will continue demands. And since advertising is an to experiment and innovate to find ways indispensable part of life, why not make it to increase their share-of-online-time with all more interesting?”38 users and facilitate brand consumer engagement within that. These ads form a key part of that In summary, this format and its possibilities are strategy. exciting. It’s an upgraded version of the tried and
37,38 http://bit.ly/2txmPDg Image source: screenshots from WeChat Moments [ 32 ] TEXT HEAVY SLIDE WTH IMAGE 2
6 0 0 3 10 3 y 3 0 0 ” ” ” n a 0 2017 ” 3 114.2 118 0 ” 3 2 0 6 3 3 ” 3 0 3 3 0 0 8 6 3 0 6 3 3 1960X960 f ” 23 3 y0 06 y0 3 6 3 3 y0 y 3 6 0 6 3 6 6 0 7 0 YSL, Tiffany, Apple ”T 0 Tiffany 0 3Tiffany y 0 n 3 8 3 3 0 y 3 i3 0 6 - 6 3 6 0 6 y3 5 0 “0 3 3 6 3 0 3 3 6 ”
Source:http://resonancechina.com/wechat-releases-eye-catching-new-advert-format-chinese-new-year/ https://www.chinainternetwatch.com/22822/wechat-data-report-2017/ http://www.199it.com/archives/653630.html [ 33 ] WeChat will always prioritize user experience above all else
[ 34 ] MINDSHARE POV
BEAUTY IS BOOSTING SPEED TO MARKET
Fast fashion disrupted the world of apparel retailing through shortened supply chains. Now the same phenomenon is emerging in the world of beauty.
[ 35 ] TEXTThe “fast HEAVYbeauty” SLIDEtrend WTHis IMAGEdriven by 2 customers aged between 18 and 24, according to Maureen Mullen, co-founder and chief strategy officer at L2. Speaking to BoF, she noted “They’re reasonably fickle client who’s all the time in search of what’s new.”39 Today, a new wave of beauty brands is following the fast fashion model, reducing the cycle time from concept development to consumption. Fast beauty brands like NYX, Teeez, ELF, Glow Concept, Kiko Milano, and others are shortening the production cycle to bring their goods to market more quickly and jump on trends as they emerge. Mullen also noted that the fast beauty phenomenon “has put a ton of stress on traditional beauty brands.” In response, some big companies have managed to accelerate their speed-to-market. Maybelline’s speed-to-market used to be 12 to 18 months, however some products now can be produced in 6 to 8 months after the brand accelerated the production cycle by updating process. Others acquire niche brands with flexible models. For example, L’Oréal acquired NYX cosmetics in 2014, while Estée Lauder invested $200 million in acquiring Becca Cosmetics and bought Too Faced for $1.45 billion in 2016.40 Compared to the fashion industry, manufacturing new products in the beauty industry is much more complicated due to safety issues. However, luxury beauty brands can also learn from the flexibility and innovation of fast beauty brands. They can upgrade the manufacturing process to speed up the time while ensuring product safety. Better control over product development also allows brands to better control the timing of launching new products. To further shorten the production process, luxury brands can also invest in technology while keeping new products in consonance with customer trends. 41
39, 40 https://www.businessoffashion.com/articles/professional/beauty-brands-are-boosting-speed-to-market 41 https://digiday.com/marketing/speed-market-luxury-brands-picking-pace-production-cycles/ [ 36 ] TEXT HEAVY SLIDE WTH IMAGE 2
0 0 1 0 1 Y BECCA COSMETICS1 14.5 Y TOO FACED0 Maureen Mullen 118 24 0 N 0 GUCCI 1 2 3 1 ” B 0 JEAN- 6 8 0 MARC DUPLAIX 1 GUCCI B 1 1 3 0 1 B F 0 39 3N GUCCI XNYX TEEEZ ELF GLOW CONCEPT 1 39 3N 0 KIKO MILANO B 1 B 34 1 1 B 0 0 0 B MULLEN 1“ L 1 1 B F B 4 o 0 13 L 0 B B 4 0 B B 0 4 12 189 1 B 1 B 9 4 1 6 ” 1 B 0 “ B 0
39, 40 https://www.businessoffashion.com/articles/professional/beauty-brands-are-boosting-speed-to-market 41 https://digiday.com/marketing/speed-market-luxury-brands-picking-pace-production-cycles/ [ 37 ] MINDSHARE POV
VOLVO’S LUXURY PIVOT BRINGS RECOGNITION
Volvo reported a 22% increase in sales y.o.y. in January 2018, driven by strong demand in China and the US. China sales were in fact up a great 38% y.o.y. for the month, thanks to the sales of the new XC60, according to a company announcement. 42
42 https://www.reuters.com/article/geely-volvocars-sales/geelys-volvo-cars-posts-22-pct-rise-in-jan- sales-on-china-u-s-upturn-idUSL8N1PS294 [ 38 ] VolvoTEXTCars HEAVYwas SLIDEbought WTHby its IMAGEcurrent Chinese 2 2018 owner Geely in 2010, and has been expanding P 22 rapidly in the market ever since. It has effectively turned around from a struggling car brand with 38 XC60 an in-distinguishable premium image, to a 2010 4 ” thriving luxury player. In 2016 it announced an A 51 expanded production plan in China, including the S90, which became the most premium car 2016 manufactured in China so far. Other initiatives S90 S90 include the specially upgraded luxury model called S90 Excellence, especially designed to be EXCELLENCE driven by a chauffeur (it doesn’t have a front 5 passenger seat). In Shanghai, the company has 5 recently opened a brand new showroom at IAPM “ 1 mall, surrounding itself with luxury fashion 3 brands in a high-end environment. Looking to be totally different from a typical showroom, it aims A “ to give a luxury consumer experience, focused on brand building rather than sales. M The move from safe, generic, family car towards 2 1 a luxury positioning has been a conscious 3 gradual effort from the brand over the past few years. A browse around the company’s website CARE shows car descriptions such as “the future BY VOLVO” 5 of luxury” and “Scandinavian design, pure luxury and advanced technology,” a far cry P from decades ago when the brand was solely XC40 SUV focused on communicating its reliable safety features.43 P The recent initiative Care by Volvo is another clever move towards pleasing young luxury 2018 5 audiences. A monthly subscription service at a 50 PXC40 fixed cost will let consumers experience a new I kind of car ownership. The initiative is very much in line with the luxury sharing economy trend we have observed for other product categories. The service will be offered with every model starting from the XC40 compact SUV, and includes other services such as concierge and pick-up services, in a further bid to establish a luxury offering.44 Volvo is also off to a fantastic start to 2018 globally. For the first time in over 50 years, Volvo won the prestigious “Car of the Year” award at the Geneva Motor Show 2018, for its XC40 model. The award considers a long list of factors across design, innovation and security. With a continued luxury strategy and positioning, Volvo is set for further success in China and abroad.45
43 https://www.volvocars.com 44 https://www.volvocars.com/intl/cars/care-by-Volvo 45 http://www.chinadaily.com.cn/a/201803/06/WS5a9e0151a3106e7dcc13fd9b.html [ 39 ] MINDSHARE POV
HOW CAN LUXURY BRANDS THRIVE IN TODAY’S DIGITAL LANDSCAPE?
A McKinsey & Company report from January details how luxury has changed the consumer journey and marketing landscape for luxury products. Mindshare distills three key takeaways for brands.
[ 40 ] Digital luxury is increasingly a customer-to- Digital is creating new ways to consume customer (C2C) economy. As McKinsey puts luxury products. Will Rent-the-Runway do to it: “The [luxury] consumer is central to the luxury fashion what Spotify did to music? shopping journey, from advocacy to sales. McKinsey judges it too early to tell but finds Luxury consumers (…) are becoming, in effect, “early symptoms of a broader change, which in another marketing channel. Brands must learn the not-too-distant future might fundamentally how to deal with ambiguity and accept that some alter the way consumers approach luxury.”48 aspects of their messaging will be co-created We’ve previously covered the rise of the luxury with their customers rather than controlled sharing economy, which especially in China has unilaterally by their management teams.”46 This potential to be a game-changer and reshape the has proven a difficult pill to swallow for many consumption patterns for luxury. Freedom from heritage luxury brands – a prime example being the burden of long-term ownership, and access Chanel not allowing reviews of their beauty to a broader range of products on an occasion products on their official e-commerce. However, basis, is in line with how many consume up and coming premium brands have shown that products and services in other areas of their lives there is much to gain from embracing from Didi and AirBnb, to Netflix and QQ Music. discussions of your brand online, and even Besides sharing services, branded consignment encouraging it. The success of brands like Ouai services is another potential disruptor. The and Glossier who have embraced a much more unofficial luxury second-hand and vintage market inclusive approach, even using crowdsourcing is already thriving online, and Stella McCartney for their product development, proves this. The has become the first brand to partner with The effort you take trying to censor or control the Real Real to encourage the re-sale of her online sentiments around your brand are better products on their platforms. spent trying to further improve your products.
Digital is creating a new definition of customer intimacy. The report cites an example of how in a different era, “Louis Vuitton hand- wrote specific suggestions to a customer to recommend particular travel bags for a transatlantic journey to New York City.” Today, big data and advanced analytics can help brands find opportunities to provide services uniquely tailored to each customer and occasion, so the brands seem as authentic as Vuitton’s former notes.”47 Personalization at scale, powered by big data, has seemingly infinite potential. Luxury groups can leverage it cross-brands through data sharing, and thus paint a more detailed picture of a consumer, from their fashion to skincare preferences, and personalize their communications to them accordingly. This would help build relationships and intimacy between brand and consumer. If consumers are going to pay a premium for your products, they will want to feel understood and known.
46,47,48 McKinsey & Company – Luxury in the age of digital Darwinism [ 41 ] “ Stella McCartney 7 The Real Real “ 7 . 4 7 C2C “ “ 1 “ “ 1 “ “ 1 “ “ ” Ouai Glossier “ “ “8 “ 8 7 “ “ 7 “ “ 7 “ “ “ 7 “ “ “ “ “ “ Rent-the-Runway “ Spotify 4“ 7 “ 1 “ “ “ 6 “ 6 7 “ “ 1 “ — 6“ “ Airbnb Netflix QQ “
46,47,48 McKinsey & Company – Luxury in the age of digital Darwinism [ 42 ] Personalization at scale, powered by big data, has seemingly infinite potential
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