Luxury Goods

LUXURY GOODS

China Online Boom: ...yet to come for Ostrich Luxury Brands

21 FEBRUARY 2017 at 05:29* We go back to surveying how western luxury goods brands are faring in the Chinese digital market, following up on our two previous reports: China Online Boom - No Country for Ostrich Brands; Best Luca Solca of: China Online Boom: Ostriches are lifting their heads from the sand. (+44) 203 430 8503 [email protected] China is the most advanced digital market in the world Melania Grippo Digital payment penetration in China is 50 times higher than in the USA, largely still relying on (+39) 02 89 63 1724 [email protected] plastic. FMCG online penetration has reached the mid-teens. Big-box retailing in China makes shopping malls and department stores in the USA look like the garden of Eden. Guido Lucarelli (+39) 02 89 63 1726 [email protected] Western luxury brands in China are still lagging behind Only 21 of the 34 brands we have analysed operate an e-commerce mono-brand website in China. Even more remarkable is that the largest brands, such as LV, Hermès, Gucci, Prada, Ralph Lauren and Swatch, do not have an ecommerce mono-brand site. For comparison, 31 out of 32 brands Specialist sales surveyed operate an e-commerce mono-brand website in the USA, and 30 out of 32 in the UK. David Tovar Digital proficiency in China is 46% – against 55% in our latest digital competitive map (DCM). (+44) 203 430 8677

Burberry, Michael Kors and Cartier are the only exceptions Contactlab Burberry stands out in China as strong leader on the Strategic Reach axis for exploiting all possible Marco Pozzi (+39) 02 28 31 181 ecommerce channels as well as on the Digital Customer Experience Axis, excelling in customer [email protected] service and style advisory. Michael Kors and Cartier are close behind Burberry on the Digital

Francesca Borgonovo Customer Experience axis thanks to personal services and customer service. (+39) 02 28 31 181 [email protected] It is less than ideal that digital luxury is still dominated by local champions Xian Zhang This is less than ideal: 1) the amount of grey market products (and outright fakes) still seems very (+39) 02 28 31 181 high – western luxury brands have mono-brand websites of which they are not aware; 2) digital can [email protected] rapidly become very relevant for Chinese consumers, as they are young, tech savvy, and eager to Kuiling Song embrace change; and 3) western luxury brands have a fragile digital position, as they have a (+39) 02 28 31 181 sketchy presence with their most relevant consumer nationality. [email protected]

* Date and time (London Time) on which the investment recommendation was finalised. It may differ from the date and time of broad dissemination on the website.See Appendix (on p88) for Analyst Certification, Important Disclosures and Non-US Research Analyst disclosures.

Contents

Executive Summary ______3

Detailed Results ______15 Methodology ______15 Strategic Reach in China ______18 Digital experience for Chinese Customers ______43

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 2

Executive Summary

We go back to surveying how western luxury goods brands are faring in the Chinese digital market, following up on our two previous reports: China Online Boom - No Country for Ostrich Brands; Best of: China Online Boom: Ostriches are lifting their heads from the sand.

China is the most advanced digital market in the world

Digital payment penetration in China is 50 times higher than in the USA, largely still relying on plastic. FMCG online penetration has reached the mid-teens. Big-box retailing in China makes shopping malls and department stores in the USA look like the garden of Eden.

Western luxury brands in China are still lagging behind

Only 21 of the 34 brands we have analysed operate an e-commerce mono-brand website in China. Even more remarkable is the fact that the largest brands, including LV, Hermès, Gucci, Prada, Ralph Lauren and Swatch, do not have an ecommerce mono-brand website. This compares with almost all the brands (31 out of 32) operating an e-commerce mono-brand website in the USA, and 30 out of 32 in the UK. Digital proficiency in China is 46% – against 55% from our most recent DCM. Western digital luxury still seems where we had left it two years ago.

Burberry, Michael Kors and Cartier are the only exceptions

Burberry stands out as strong leader on the Strategic Reach axis in China for exploiting all possible ecommerce channels (e-commerce mono-brand, flagship online store on Tmall, online store on WeChat, JD.com, Secoo.com and 5Lux.com) as well as on the Digital Experience Axis excelling in customer service and style advisory. Also Ray-Ban ranks high on the Strategic Reach axis thanks to the capability to engage Chinese customers via Content localization and Social Media presence. Michael Kors and Cartier are close behind Burberry on the Digital Customer Experience axis thanks to personal services and customer service.

It is less than ideal that digital luxury is still dominated by local champions

This is less than ideal: 1) the amount of grey market products (and outright fakes) still seems very high – western luxury brands have mono-brand websites of which they are not aware; 2) digital can rapidly become very relevant for Chinese consumers, as they are young, tech savvy, and eager to embrace change; and 3) western luxury brands have a fragile digital position, as they have a sketchy presence with their most relevant consumer nationality.

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China is the most advanced digital market in the world

Mobile payment penetration in China is 50 times higher than in the USA, largely still relying on plastic. FMCG online penetration has reached the mid-teens. Big-box retailing in China makes shopping malls and department stores in the USA look like the garden of Eden.

Figure 1: Mobile payment penetration in China is 50 times higher than in the USA, largely still relying on plastic (1/2) Transaction value of third-party payments (USD trn)

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0 2015 2016e 2017e 2018e 2019e USA China

Source: Forrester Research, iResearch Note: Post-2015 figures are forecast, renminbi values converted to USD at current rate

Figure 2: Digital payment penetration in China is 50 times higher than in the USA, largely still relying on plastic (2/2) E-commerce mix by payment methods China USA

PrePay Others Others Postpay Bank Pre-Paid Pre-Paid PrePay 2% 2% 3% 2% Transfer 4% 3% 3% 6% Cash on Delivery 4% Cash on Credit card Delivery 34% 7% Bank Transfer 6%

Debit Card 9% eWallet 60%

eWallet Credit Card 20% Debit card 10% 25%

Source: Worldpay “Global payments report”, November 2016

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Figure 3: In China, there is a broad acceptance of digital payment solutions like WeChat Pay (Tencent) and Alipay (Alibaba) China’s mobile-payment market

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 2014 2015 Tencent Alipay Others

Source: iResearch, The Wall Street Journal 22/05/2016

Figure 4: Digital is booming in consumer goods in China Rate of usage of different mobile apps in China (Jun-2016 data)

Instant messaging Search News Music Video Payment Shopping Banking Games Literature Ticket booking Email Ordering & Delivery BBS Online course Finance 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: China Internet Network Information Center

Figure 5: FMCG online penetration has reached the mid-teens Quotes from meetings in China In offline FMCG, 25 out of 28 categories are declining. Only few of them recover online. EUR 2.3trn to be generated, over the next five years. […] Hypermarkets are very negative. Brick & Mortar logistics are down, even more hypermarkets are shutting down. Local retailers pay with 120 days delay (!). There is no liquidity. […] Ferrero derives c.15-20% of online sales in China; product personalization is key. The range on Digital is different from the range offered in the physical stores. (Leading food company)

Internet use is increasing: Carrefour, Walmart are declining. (Consulting company) Source: Exane BNP Paribas proprietary field research in China

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Figure 6: Chinese digital growth is causing the demise of physical retail formats like hypermarkets Urban FMCG market value (RMB bn) 2012-15 CAGR 2012-15 market share (RMB bn)

40% 1,068 1,146 1,209 1,251 100% 35% 90% 30% 80% 25% 70% 20% 60% 15% 50% 10% 40% 5% 30% 0% 20% (5%) 10% 0% 2012 2013 2014 2015

Super/Mini Hypermarket Grocery CVS E-Commerce Other

Source: Bain, Kantar Worldpanel Note: Notes: Hypermarket refers to stores with more than 6,000 square meters; the hypermarket channel includes only the top 72 named hypermarket retailers, representing 80% of total hypermarket channel (based on 2015 revenues); super/mini refers to stores from 100-6,000 square meters; CVS includes chain and individual convenience stores and is defined by being open for more than 16 hours a day; grocery refers to stores with less than 100 square meters; other includes department stores, free market, wholesales, work unit, directsales, specialty store, overseas shopping and others

Figure 7: Big-box retailing in China makes shopping malls and department stores in the USA look like the Garden of Eden China USA

Source: Google and Getty images

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 6

Western luxury brands in China are still lagging behind

Only 21 of the 34 brands we have analysed operate an e-commerce mono-brand website in China. Even more remarkable is the fact that the largest brands, including LV, Hermès, Gucci, Prada, Ralph Lauren and Swatch, do not have an ecommerce mono-brand. This compares with almost all the brands (31 out of 32) operating an e- commerce mono-brand website in the USA, and 30 out of 32 in the UK. Digital proficiency in China is 46% – against 55% from our most recent DCM. Western digital luxury still seems where we had left it two years ago.

Figure 8: Only 21 of the 34 brands we have surveyed operate an e-commerce mono-brand website in China Strategic Reach – Ecommerce in China (China, January 2017)

ECOMMERCE IN CHINA % E-Commerce Online store Monobrand Flagship online store Online store Online Store Online Store Brand Ranking Categories in on WeChat Ecommerce on Tmall on JD.com on Secoo.com on 5Lux.com Mainland China (Jul 2016 - Jan 2017) Burberry 1 YES 86% YES Yes (2 bags Fashion Show Sept 16) YES YES YES Ray-Ban 2 YES 100% YES NO YES YES YES Coach 3 YES 93% (Quit in 2016) NO YES YES YES Hugo Boss 3 YES 83% YES NO YES YES YES Chow Tai Fook 3 YES 100% YES NO YES NO NO Armani 6 YES 76% Ca 100 Watches NO YES YES YES Balenciaga 6 YES 86% NO NO YES YES NO Cartier 6 YES 78% NO Yes (Ca. 60 items) Ca 30 Watches YES YES Tod's 6 YES 50% YES NO YES YES NO Dolce&Gabbana 10 YES 72% NO NO YES YES YES Moncler 10 YES 75% NO NO YES YES YES YES (US Tory Burch 10 100% NO NO YES NO NO website) Valentino 10 YES 83% NO NO YES YES YES Michael Kors 14 YES 65% NO NO YES NO YES Brunello Cucinelli 15 YES 95% NO NO NO NO NO Ferragamo 15 YES 38% NO NO YES YES YES Loro Piana 15 YES 100% NO NO NO NO NO Shanghai Tang 15 YES 90% NO NO NO NO NO Chanel 19 YES (Beauty) 7% NO Yes (1 Perfume) NO YES YES Dior 19 YES (Beauty) 7% NO Yes (1 bag) NO YES YES Givenchy 19 YES (IOS APP) 70% NO NO YES YES NO Yes (Necklaces for Chinese valentine; 12 pieces for Bulgari 22 NO no CN ecommerce NO Ca 25 Perfumes YES YES Christmas; 3 rings for B.Zero 1 collection) Fendi 22 NO no CN ecommerce NO NO YES YES YES Gucci 22 NO no CN ecommerce NO NO YES YES YES Prada 22 NO no CN ecommerce NO NO YES YES YES Tiffany 22 NO no CN ecommerce NO NO YES YES YES Zegna 22 NO no CN ecommerce NO NO YES YES YES Bottega Veneta 28 NO no CN ecommerce NO NO YES YES NO Hermès 28 NO no CN ecommerce NO NO Ca 20 Perfumes YES YES Saint Laurent 28 NO no CN ecommerce NO NO YES YES NO Only Phone Louis Vuitton 31 no CN ecommerce NO NO NO YES YES Orders Ralph Lauren 31 NO no CN ecommerce NO NO YES NO NO Swatch 31 NO no CN ecommerce NO NO YES NO NO Céline 34 NO no CN ecommerce NO n.a (no WeChat account) NO YES NO

Yes Above 85% Yes Permanent Yes Yes Yes

Between Yes (App) Limited offer Temporary Limited offer Limited offer Limited offer 50% and 85%

No Below 50% No No No No No

Source: Contactlab Analysis

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Figure 9: Even more remarkable is the fact that the largest brands, such as LV, Hermès, Gucci, Prada, Ralph Lauren and Swatch, do not have an ecommerce mono-brand

WEBSITE URL LOCALIZATION ECOMMERCE TO CHINA CHINA COUNTRY SELECTION FOR NEWSLETTER CHINESE SEARCH ENGINE / SOCIALS

Brand Website URL Localization Brand Ship to China Brand Email Language Brand Certified links / Accounts

Armani YNAP Premium CN Armani YES Armani CN Armani Baidu, WeChat, Weibo, Youku Balenciaga YNAP Runner-Up CN Balenciaga YES Balenciaga CN Balenciaga Baidu, WeChat, Weibo Bottega Veneta YNAP High-End WW Bottega Veneta NO Bottega Veneta CN Bottega Veneta Baidu, WeChat, Weibo, Youku Brunello Cucinelli YNAP High-End CN Brunello Cucinelli YES Brunello Cucinelli CN Brunello Cucinelli WeChat, Weibo Bulgari Jeweller CN Bulgari NO Bulgari CN Bulgari Baidu, WeChat, Weibo, Youku Burberry Mega-Brand CN Burberry YES Burberry CN Burberry Baidu, WeChat, Weibo, Youku

Cartier Jeweller CN Cartier YES Cartier CN Cartier Baidu, WeChat, Weibo, Youku

Céline High-End CN Céline NO Céline Welcome Email Only (CN) Céline Baidu

Chanel High-End CN Chanel YES (Beauty) Chanel CN Chanel Baidu, WeChat, Weibo, Youku Coach Premium CN Coach YES Coach CN Coach Baidu, WeChat, Weibo, Youku Dior High-End CN Dior YES (Beauty) Dior CN Dior Baidu, WeChat, Weibo, Youku

Dolce&Gabbana The Level Group Runner-Up CN Dolce&Gabbana YES Dolce&Gabbana CN Dolce&Gabbana Baidu, WeChat, Weibo, Youku Fendi Runner-Up CN Fendi NO Fendi CN Fendi Baidu, WeChat, Weibo, Youku Ferragamo Runner-Up CN Ferragamo YES Ferragamo No Email Received Ferragamo Baidu, WeChat, Weibo, Youku Givenchy YNAP Runner-Up CN(Editorial focus) Givenchy YES (IOS APP) Givenchy CN Givenchy Baidu, WeChat, Weibo, Youku Gucci Mega-Brand CN Gucci NO Gucci CN Gucci Baidu, WeChat, Weibo, Youku CN(Editorial focus, only scarf Hermès Mega-Brand Hermès NO Hermès CN Hermès Baidu, WeChat, Weibo, Youku products) Hugo Boss Premium CN Hugo Boss YES Hugo Boss CN Hugo Boss Baidu, WeChat, Weibo, Youku Loro Piana High-End CN Loro Piana YES Loro Piana Welcome Email Only (CN) Loro Piana Baidu, WeChat, Weibo

Louis Vuitton Mega-Brand CN Louis Vuitton Only Phone Orders Louis Vuitton CN Louis Vuitton Baidu, WeChat, Weibo, Youku

Michael Kors Premium CN Michael Kors YES Michael Kors CN Michael Kors Baidu, WeChat, Weibo, Youku Moncler YNAP Premium CN Moncler YES Moncler CN Moncler Baidu, WeChat, Weibo, Youku Prada Mega-Brand CN Prada NO Prada CN Prada Baidu, WeChat, Weibo Ralph Lauren Premium CN (Editorial focus) Ralph Lauren NO Ralph Lauren No Email Received Ralph Lauren Baidu, WeChat, Weibo, Youku Ray-Ban Mega-Brand CN Ray-Ban YES Ray-Ban CN Ray-Ban Baidu, WeChat, Weibo, Youku Saint Laurent YNAP High-End WW Saint Laurent NO Saint Laurent CN Saint Laurent Baidu, WeChat, Weibo Swatch Premium CN Swatch NO Swatch CN Swatch WeChat, Weibo, Youku Tiffany Jeweller CN Tiffany NO Tiffany CN Tiffany Baidu, WeChat, Weibo Tod's Italian Touch Runner-Up CN Tod's YES Tod's CN Tod's Baidu, WeChat, Weibo, Youku CN (Editorial focus), US Tory Burch Premium Tory Burch YES (US website) Tory Burch Welcome Email Only (CN) Tory Burch Baidu, WeChat, Weibo, Youku (Ecommerce) Valentino YNAP High-End CN Valentino YES Valentino CN Valentino Baidu, WeChat, Weibo, Youku Zegna Mega-Brand CN Zegna NO Zegna CN Zegna Baidu, WeChat, Weibo, Youku No email option for Mainland Chow Tai Fook Jeweller CN Chow Tai Fook YES Chow Tai Fook Chow Tai Fook Baidu, WeChat, Weibo, Youku China

Shanghai Tang Premium CN Shanghai Tang YES Shanghai Tang CN / EN Shanghai Tang WeChat, Weibo

CN (Chinese URL) Yes Chinese Yes English/Welcome Email Only WW / Asia Yes (App) (Chinese) No (No website / Other countries No China country option for No No URL) newsletter Source: Contactlab Analysis

Figure 10: Digital proficiency in China is 46% – against 55% from our most recent DCM (1/2) DCM China – January 2017

Digital Competitive Map China Competitive Map Score Over Maximum Potential % Axes Score Strategic Reach in China 1,440 66% Digital Experience for Chinese Customers 2,597 39% Total Panel 4,037 46%

Digital Competitive Map China Competitive Map Score Over Maximum Potential % Criteria Score Display Visualization on China Website 268 99% China Website Localization 264 97% Customer Engagement Strategy for Chinese Customer 850 74% Online Shopping on China Websites 559 53% Store Finder 539 50% Product Presentation on China Websites 116 49% Ecommerce to China 251 46% Basic Customer Service on China Websites 109 46% Email Proficiency for Chinese Customers 254 42% Product Selection Support on China Websites 298 38% Apps for Chinese Customers 77 38% "Made In" on China Websites 75 37% Share on China/Intl. Websites 70 29% Personal Services on China Websites 189 29% Delivery Options in China 76 14% Cross-Channel Services In China 43 8% Total Panel 4,037 46% Source: Contactlab Analysis

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Figure 11: Digital proficiency in China is 46% – against 55% from our most recent DCM (2/2) DCM – January 2016

FW15 Score Over Digital Competitive Map Competitive Map Competitive Map Delta Score % Maximum Axes Score SS15 Score FW15 Potential % Strategic Reach 1,058 1,123 6% 53% Digital Customer Experience 2,626 2,889 10% 56% Total Panel 3,684 4,012 9% 55%

FW15 Score Over Digital Competitive Map Competitive Map Competitive Map Delta Score % Maximum Criteria Score SS15 Score FW15 Potential % Display Visualization 259 268 3% 89% Online Shopping 428 454 6% 84% Share 132 130 -2% 72% Web Languages 254 258 2% 72% Basic Customer Service 116 124 7% 69% Product Selection Support 316 336 6% 62% E-mail Reach 268 287 7% 60% Online Shoppable Product Range 259 277 7% 58% Delivery Options 190 205 8% 57% Product Presentation 106 113 7% 54% Store Finder 459 479 4% 50% E-mail Proficiency 239 263 10% 49% "Made In" On Web 124 128 3% 43% Apps 84 100 19% 42% Personal Services 129 207 60% 38% Online Geographical Coverage 153 173 13% 36% Cross Channel Services 168 210 25% 35% Total Panel 3,684 4,012 9% 55% Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 9

Burberry, Michael Kors and Cartier are the only exceptions

Burberry stands out as strong leader on the Strategic Reach axis in China for exploiting all possible ecommerce channels (e-commerce mono-brand, flagship online store on Tmall, online store on WeChat, JD.com, Secoo.com and 5Lux.com) as well as on the Digital Experience Axis excelling in customer service and style advisory. Ray-Ban ranks high on the Strategic Reach axis thanks to the capability to engage Chinese customers via Content localization and Social Media presence. Michael Kors, Cartier, together with the aforementioned Burberry, lead in the Digital Customer Experience axis thanks to personal services and customer service.

Figure 12: Burberry overall leading the DCM China, Michael Kors and Cartier co-leaders with Burberry on the Digital Customer Experience Axis Digital Competitive Map China (January 2017)

Source: Contactlab Analysis

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Figure 13: Burberry leads on the Strategic Reach axis in China, exploiting all possible e-commerce channels. Also Ray-Ban ranks high thanks to the capability to engage Chinese customers via Content localization and Social Media presence Strategic Reach Axis in China – Overall Brand Ranking (China, January 2017) STRATEGIC REACH AXIS IN CHINA - RANKINGS

CHINA DIGITAL STRATEGY MADE IN CUSTOMER ENGAGEMENT STRATEGY Chinese Website Ecommerce ON CHINA WEBSITES FOR CHINESE CUSTOMERS Brand SCORE RANKING Localisation to China Burberry 59.0 1 1 1 11 4 Ray-Ban 54.0 2 1 2 14 1 Coach 52.0 3 1 3 14 1 Hugo Boss 52.0 3 1 3 14 1 Dolce&Gabbana 51.0 5 1 10 1 14 Valentino 51.0 5 1 10 1 14 Armani 50.0 7 1 6 14 4 Cartier 50.0 7 1 6 14 4 Ferragamo 49.0 9 1 15 1 14 Michael Kors 48.0 10 1 14 14 4 Tod's 48.0 10 1 6 1 21 Chow Tai Fook 48.0 10 1 3 14 10 Fendi 47.0 13 1 22 1 9 Dior 46.0 14 1 19 14 4 Gucci 46.0 14 1 22 1 10 Moncler 46.0 14 1 10 14 10 Balenciaga 44.0 17 1 6 1 30 Louis Vuitton 43.0 18 1 31 11 10 Chanel 42.0 19 1 19 14 14 Shanghai Tang 41.5 20 1 15 14 20 Tory Burch 40.5 21 1 10 14 24 Bottega Veneta 39.0 22 33 28 1 19 Bulgari 39.0 22 1 22 14 14 Zegna 39.0 22 1 22 11 25 Givenchy 38.0 25 1 19 1 32 Brunello Cucinelli 37.0 26 1 15 14 26 Loro Piana 35.5 27 1 15 1 33 Ralph Lauren 33.0 28 1 31 14 21 Swatch 33.0 28 1 31 14 21 Hermès 32.0 30 1 28 14 26 Prada 32.0 30 1 22 14 28 Tiffany 32.0 30 1 22 14 28 Saint Laurent 26.0 33 33 28 14 30 Céline 16.5 34 1 34 14 34 Source: Contactlab analysis

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Figure 14: Michael Kors, Burberry and Cartier leading the Digital Customer Experience axis. Namely, Burberry, LV and Dior excelling in Style Advisory. Cross-Channel Services still quite neglected in China, only Burberry and Loro Piana standing out Digital Experience Axis – Overall Brand Ranking (China, January 2017)

DIGITAL EXPERIENCE AXIS FOR CHINESE CUSTOMERS - RANKINGS CROSS-CHANNEL ECOMMERCE EXPERIENCE EXPERIENCE CUSTOMER ENGAGEMENT EXPERIENCE WEBSITE EXPERIENCE ON CHINESE WEBSITES ON CHINESE WEBSITES FOR CHINESE FOR CHINESE CUSTOMERS CUSTOMERS Display Product Product Online Basic Customer Personal Delivery Cross-Channel Email Proficiency Share Apps Visualization Presentation Selection Shopping Store Brand SCORE RANKING Service on China Services on Options Services In for Chinese on China/Intl. for Chinese on China on China Support on on China Finder Websites China Websites in China China Customers Websites Customers Websites Website China Website Websites Michael Kors 117 1 1 6 7 1 6 1 2 10 7 14 2 14 Burberry 116 2 1 1 7 10 4 10 7 4 1 1 2 25 Cartier 114 3 1 18 6 10 1 5 13 4 4 13 12 1 Coach 108 4 1 18 1 1 13 2 3 17 4 25 2 23 Chanel 106 5 1 18 12 1 13 4 7 8 12 8 8 7 Dior 105 6 1 18 23 1 2 5 3 10 12 5 28 7 Hugo Boss 98 7 1 6 12 1 3 12 1 30 12 14 2 19 Loro Piana 96 8 1 1 4 8 9 20 13 15 1 28 7 23 Valentino 94 9 1 6 12 10 7 12 19 24 12 1 12 5 Armani 94 10 1 6 12 10 9 17 7 17 12 5 12 14 Balenciaga 92 11 1 6 12 24 20 5 19 17 4 1 12 19 Ray-Ban 90 12 1 3 23 1 8 12 13 24 12 8 28 14 Louis Vuitton 88 13 1 18 4 10 4 26 19 1 12 5 8 1 Chow Tai Fook 88 13 1 29 3 1 23 2 13 33 3 28 28 7 Tod's 87 15 1 18 17 10 16 12 3 10 12 8 28 25 Tory Burch 84 16 1 3 1 9 25 17 19 10 12 28 12 12 Shanghai Tang 81 17 1 6 17 10 16 9 18 21 7 18 12 25 Moncler 78 18 33 18 17 24 28 12 7 15 12 8 26 19 Brunello Cucinelli 73 19 1 18 7 26 26 17 7 30 7 25 1 25 Dolce & Gabbana 72 20 1 6 7 26 28 10 13 28 12 22 12 25 Givenchy 72 20 1 6 17 10 28 21 7 4 7 27 28 7 Ferragamo 68 22 1 6 23 10 15 5 3 34 12 28 12 25 Gucci 68 22 1 6 17 10 26 32 19 4 12 1 2 5 Bulgari 64 24 1 6 7 10 23 22 19 27 11 12 25 14 Swatch 62 25 1 29 23 10 20 32 19 3 12 14 12 1 Tiffany 55 26 1 6 17 26 16 26 19 24 12 22 26 1 Fendi 52 27 1 29 32 10 12 32 19 8 12 18 12 14 Zegna 52 28 1 3 27 26 11 26 19 21 12 17 28 25 Bottega Veneta 49 29 1 18 30 26 16 22 19 10 12 22 12 25 Saint Laurent 45 30 1 18 27 31 28 22 19 21 12 18 8 19 Prada 39 31 33 18 32 31 20 26 19 28 12 18 12 12 Hermès 36 32 1 32 29 31 28 26 19 17 12 28 12 7 Ralph Lauren 35 33 1 34 32 10 28 26 19 1 12 28 28 25 Céline 27 34 1 32 30 31 28 25 19 30 12 28 8 25 Source: Contactlab Analysis

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It is less than ideal that digital luxury is still dominated by local champions

Figure 15: The amount of grey market products (and outright fakes) still seems very high Seizures of counterfeit and pirated goods Top provenance economies By product category

100,000 30,000

90,000 25,000 80,000 20,000 70,000 60,000 15,000 50,000 10,000

40,000 5,000 30,000 0 20,000 10,000 0

Source: OECD, 2013

Figure 16: Digital can rapidly become very relevant for Chinese consumers, as they are young, tech savvy, and eager to embrace change Composition of online Luxury Goods consumers By gender By age

50%

45%

40%

35%

30% Male 25% 47% Female 20% 53% 15%

10%

0% 0-17 18-25 26-35 36-45 >45

Source: Tencent, November 2016

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Figure 17: More and more consumers in China prefer to buy luxury products online Secoo Trend in # of customers and orders (% y/y) Trend in # of lifestyle product customers and orders (% y/y)

1,200 180 +306%

+187% 160 1,000 140

800 120 100 +191% 600 80

+89% 60 400 40

200 20

- - Number of Lifestyle product Number of Lifestyle product Number of customers Number of orders customers orders 2015 2016 2015 2016

Source: Secoo China Luxury E-commerce Whitebook, November 2016

Figure 18: Western luxury brands have a fragile digital position, as they have a sketchy presence with their most relevant consumer nationality # of Luxury brands with Mono-brand ecommerce

0 US UK China Korea Russia India E-commerce E-commerce in Local Language

Source: Contactlab analysis, Exane BNP Paribas

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Detailed Results

Methodology

Figure 19: In the DCM, we analyse 32 international mono-brands together with local luxury players Chow Tai Fook (Jeweller) and Shanghai Tang (Richemont) Panel of brands in the DCM

Brand Brand Bulgari Jeweller Burberry Mega-Brand Cartier Jeweller Gucci Mega-Brand Tiffany Jeweller Hermès Mega-Brand Chow Tai Fook Jeweller Louis Vuitton Mega-Brand Bottega Veneta High-End Prada Mega-Brand Brunello Cucinelli High-End Ray-Ban Mega-Brand Céline High-End Zegna Mega-Brand Chanel High-End Armani Premium Dior High-End Coach Premium Loro Piana High-End Hugo Boss Premium Saint Laurent High-End Michael Kors Premium Valentino High-End Moncler Premium Balenciaga Runner-Up Ralph Lauren Premium Dolce&Gabbana Runner-Up Swatch Premium Fendi Runner-Up Tory Burch Premium Ferragamo Runner-Up Shanghai Tang Premium Givenchy Runner-Up

Tod's Runner-Up Source: Exane BNP Paribas

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Figure 20: Major differences between DCM Jan16 vs. DCM in China: all axes/categories/criteria adapted for China, with major focus on local Socials, Payment systems and Customer Assistance DCM criteria

AXES CATEGORIES CRITERIA 2. New Parameters 1. China Website Localization 1. China Digital Strategy - Flagship online store on Tmall 2. Ecommerce in China - Online store on WeChat - Online store on JD.com - Online Store on Secoo.com - Online Store on 5Lux.com

STRATEGIC REACH IN CHINA 2. “Made in” on Chinese Websites 3. “Made in” on Chinese Websites 4. New Parameters (24 parameters) - Baidu (Chinese Search Engine) - Local content on websites 3. Customer Engagement Strategy 4. Customer Engagement Strategy - WeChat (Chinese Social Media), Weekly post for Chinese Customers for Chinese Customers frequency and Local content - Weibo (Chinese Social Media) - Youku (Chinese Video Web Platform) - Local content on emails - Major local Celebrities and Fashion Bloggers

4. Website Experience 5. Display Visualization 7. New Parameter: on Chinese Websites 6. Product Presentation - Customers Reviews 7. Product Selection Support 8. Basic Customer Service 9. New Parameters: 9. Personal Services - Style Advisor Test: WeChat Assistance - Style Advisor Test: Weibo

5. E-Commerce Experience 10. Online Shopping 10. New Parameters: DIGITAL EXPERIENCE on China Websites 11. Delivery Options in China - Quick buy option FOR CHINESE CUSTOMERS - Alipay (72 parameters) - WeChat Pay Cash on delivery 6. Cross-Channel Experience 12. Store Finder - for Chinese Customers 13. Cross-Channel Services 11. New Parameters: - Standard delivery timing 7. Customer Engagement Experience 14. Email Proficiency for Chinese Customers 15. Share 15. New Parameters: 16. Apps - Share on Weibo - Share on WeChat

Completely new criteria vs. DCM Jan16 (focus US)

Source: Contactlab Analysis

Figure 21: Local brand Chow Tai Fook

Source: Contactlab analysis

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Figure 22: Chow Tai Fook is ranked among Top Ten Luxury Goods Companies

Source: Global Powers of Luxury Goods 2016, Deloitte

Figure 23: Local Luxury Fashion brand Shanghai Tang

Source: Contactlab analysis

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Strategic Reach in China

Figure 24: Burberry strong leader on the Strategic Reach axis in China, exploiting all possible e-commerce channels. Ray-Ban, Coach and Hugo Boss standing out for to engage Chinese customers via Content localization and Social Media presence Strategic Reach Axis in China – Overall Brand Ranking (China, January 2017) STRATEGIC REACH AXIS IN CHINA - RANKINGS

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 18

Figure 25: All brands apart from BV and SL rely on China-based websites. Hermès website limited to scarves. Tory Burch split between China for editorial content and US for E-commerce to China. RL local website limited to editorial content Strategic Reach – Chinese Website Localization (China, January 2017)

CHINESE WEBSITE LOCALIZATION Brand Ranking Desktop Website URL Localization (CN) Mobile Website URL Localization (CN) Armani 1 CN CN Balenciaga 1 CN CN Brunello Cucinelli 1 CN CN Bulgari 1 CN CN Burberry 1 CN CN Cartier 1 CN CN Céline 1 CN CN Chanel 1 CN CN Coach 1 CN CN Dior 1 CN CN Dolce&Gabbana 1 CN CN Fendi 1 CN CN Ferragamo 1 CN CN Givenchy 1 CN (Editorial focus) CN (Editorial focus) Gucci 1 CN CN Hermès 1 CN (Editorial focus, only scarf products) CN (Editorial focus, only scarf products) Hugo Boss 1 CN CN Loro Piana 1 CN CN Louis Vuitton 1 CN CN Michael Kors 1 CN CN Moncler 1 CN CN Prada 1 CN CN Ralph Lauren 1 CN (Editorial focus) CN (Editorial focus) Ray-Ban 1 CN CN Swatch 1 CN CN Tiffany 1 CN CN Tod's 1 CN CN Tory Burch 1 CN (Editorial focus), US (Ecommerce) CN (Editorial focus), US (Ecommerce) Valentino 1 CN CN Zegna 1 CN CN Chow Tai Fook 1 CN CN Shanghai Tang 1 CN CN Bottega Veneta 33 WW WW Saint Laurent 33 WW WW

CN (Chinese URL) CN (Chinese URL)

WW / Asia WW / Asia No (No mobile website / Other countries No (No website / Other countries URL) URL) Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 19

Figure 26: Burberry exploiting all possible ecommerce channels. Gucci, Prada, Hermès and LV still with no direct e-commerce. Flagship Stores on Tmall and e-stores via WeChat still very limited, while wide presence on JD/Secoo/5lux. Even Céline can be purchased online on Secoo.com Strategic Reach – Ecommerce in China (China, January 2017)

Yes Above 85% Yes Permanent Yes Yes Yes

Between Yes (App) Limited offer Temporary Limited offer Limited offer Limited offer 50% and 85%

No Below 50% No No No No No

Source: Contactlab Analysis

Figure 27: Ferragamo launched Ecommerce in China on 16 December 2016

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 20

Figure 28: Chanel Beauty Online Store launched in December 2016

Source: Contactlab Analysis

Figure 29: Michael Kors Online Store launched in November 2016

Source: Contactlab Analysis

Figure 30: Dior Beauty Online Store launched in 2016

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 21

Figure 31: Tmall.com and JD.com represent c.80% of the generalist e-tailers market in China

Amazon.com.cn Jumei.com Yixun.com 1% 0% Dangdang.com 1% 1% Others.com 6% Yhd.com Gome.com.cn 1% 2% Vip.com 3%

Suning.com 4%

Tmall.com Jd.com 58% 23%

Source: iResearch Q3 2015

Figure 32: Emporio Armani new Flagship Store on Tmall with Watch focus

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 22

Figure 33: Example of Ray-Ban Flagship Store on Tmall

Source: Contactlab Analysis

Figure 34: Example of Chow Tai Fook Flagship Store on Tmall

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 23

Figure 35: Example of Chanel Online Store on WeChat

Source: Contactlab Analysis

Figure 36: Example Bulgari Online Store on WeChat

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 24

Figure 37: Example Cartier Online Store on WeChat

Source: Contactlab Analysis

Figure 38: Céline can be purchased online on Secoo.com

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 25

Figure 39: Ten brands disclose ‘Made In’ on web. As in US, Louis Vuitton and Zegna starting to disclose Made in on some important product categories Strategic Reach – ‘Made In’ on China Websites (China, January 2017) "MADE IN" ON CHINESE WEBSITES "Made In" Disclosure on Web Brand Ranking Produced in Heritage Countries once Declared Product Pages Balenciaga 1 Systematically Very high Bottega Veneta 1 Systematically Very high Dolce&Gabbana 1 Systematically Very high Fendi 1 Systematically Very high Ferragamo 1 Systematically Very high Givenchy 1 Systematically Very high Gucci 1 Systematically Very high Loro Piana 1 Systematically Very high Tod's 1 Systematically Very high Valentino 1 Systematically Very high Burberry 11 Partial Very high Louis Vuitton 11 Partial (RTW, watches) Very high Zegna 11 Partial (Shoes, bags, coats) Very high Armani 14 NO n.a Brunello Cucinelli 14 NO n.a Bulgari 14 NO n.a Cartier 14 NO n.a Céline 14 NO n.a Chanel 14 NO n.a Coach 14 NO n.a Dior 14 Rarely (Only Watches) n.a (Very high) Hermès 14 NO n.a Hugo Boss 14 NO n.a Michael Kors 14 NO (vs Yes in US) n.a Moncler 14 NO n.a Prada 14 NO n.a Ray-Ban 14 NO n.a Saint Laurent 14 NO (vs Yes in US) n.a Swatch 14 NO n.a Tiffany 14 Rarely (Only Watches) n.a (Very high) Tory Burch 14 Rarely (Only Watches) n.a (Very high) Chow Tai Fook 14 NO n.a Shanghai Tang 14 NO n.a Ralph Lauren 14 No product page on Chinese Website n.a

Systematically mentioned (above 80% Very high: above 85% production declared in Heritage of Web Product Pages) country on Web Product Page Partial: mentioned only on some Partial: between 35% and 85% production declared in relevant product categories Heritage country on Web Product Page Never / Rarely mentioned: below 20% Marginal: below 35% production declared in Heritage of Web Product Pages country on Web Product Page. Or n.a. Source: Contactlab Analysis

Figure 40: ‘Made in’ disclosure on Product pages particularly relevant for Chinese Customers Fashion & Luxury customers declaring Relevance of ‘Made in’ disclosure (% of respondents)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% WW Customers Chinese Customers Extremely+Very important Extremely+Very+ Quite important

Source: Contactlab European (+) Digital Behaviour Study 2016

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 26

Figure 41: Louis Vuitton starting to disclose ‘Made in’ on Product Pages

Source: Contactlab Analysis

Figure 42: Zegna starting to disclose ‘Made in’ on Product Pages

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 27

Figure 43: Coach, Hugo Boss and Ray-Ban rank first, closely followed by Armani, Burberry, Cartier, Dior and Michael Kors. These have an overall high level of localization with respect to language, local currency and presence on Baidu, WeChat, Weibo and Youku. Most brands localize local content on WeChat, half panel on Websites and to a lesser extent on Newsletter. Celebrities play a significant role in local communications Strategic Reach – Chinese Customer Engagement Strategy (China, January, 2017)

CUSTOMER ENGAGEMENT STRATEGY FOR CHINESE CUSTOMERS Baidu Website WeChat Email Youku (China Search Local Content on Weibo Major Local Celebrities & Fashion bloggers Brand Ranking Currency Web WeChat WeChat Weekly Post Frequency (ChineseVideo Web Local content on Emails Engine) Local Content on Website WeChat Post (Chinese Social Media) Email Language (Jul 2016 - Jan 2017) on Web Product pages Language (Chinese Social Media) (Oct-Dec 2016) Platform) Oct-Dec 2016 (%, Oct-Dec 2016) Coach 1 Certified Area RMB CN Gift guide / video for CN New Year YES signalled 1.33 47% YES signalled YES CN None Tang Yan, Li Yifeng (Events) Chinese celebrity and product Celebrity interview / style advice for CN Hugo Boss 1 Certified Link RMB CN YES signalled 1.83 65% YES signalled YES CN suggestion; Huo Jianhua New Year In shop activities and WeChat game Mid-Autumn Festival Product suggestion; Ray-Ban 1 Certified Link RMB CN Products customized for Asians YES signalled 1.00 62% YES signalled YES CN Chinese National Holiday Product Kris Wu suggestion

Chinese National Holiday; Single Day Armani 4 Certified Link RMB CN Gift guide for CN New Year YES signalled 1.33 31% YES signalled YES CN Hu Ge (Emporio Armani) Promotion Gift guide for CN New Year; Burberry 4 Certified Link RMB CN YES signalled 1.50 10% YES signalled YES CN The Kris Wu Edit Kris Wu Celebrity Kris Wu Fan Bingbing, Ni Ni (Events) Cartier 4 Certified Area RMB CN Gift guide for CN New Year YES 1.00 75% YES signalled YES CN None Lu Han (Juste un Clou Collection) Ni Ni, Li Yifeng, AngelaBaby, Yang Yang Dior 4 Certified Area RMB (beauty) CN Gift guide / offers for CN New Year YES 3.83 16% YES signalled YES CN None (Events) Michael Kors 4 Certified Link RMB CN Special collection for CN New Year YES signalled 1.33 63% YES signalled YES CN None Yang Mi (Events) Special collection / video for CN New Fendi 9 Certified Area No Price CN YES signalled 2.08 48% YES signalled YES CN None Gogoboi, Chris Lee (Events) Year Ni Ni (Eyewear) Gucci 10 Certified Area No Price CN Special collection for CN New Year YES signalled 3.08 23% YES signalled YES CN None Chris Lee (Timepieces and Jewelry) Dedicated box for store in Beijing; Louis Vuitton 10 Certified Area RMB CN YES signalled 0.83 8% YES signalled YES CN None Tang Yan, Fan Bingbing, Jing Boran (Events) Gift guide/ video for CN New Year Moncler 10 Certified Link RMB CN Special collection for CN New Year YES signalled 0.83 33% YES signalled YES CN None None No email option Special collection for Chinese New Chow Tai Fook 10 Certified Link RMB CN YES signalled 4.08 36% YES signalled YES for Mainland n.a. None Year China Bulgari 14 Certified Area RMB(selected product) CN None YES 0.83 42% YES signalled YES CN None Kris Wu (Watch) Chanel 14 Certified Area RMB (beauty) CN None YES 2.75 29% YES YES CN Chinese E-commerce launch for beauty Hu Ge (Beauty) Dolce&Gabbana 14 Certified Link RMB CN Special collection for CN New Year YES 0.92 19% YES signalled YES CN None None No Email Ferragamo 14 Certified Link RMB CN Gift guide for CN New Year YES signalled 1.00 33% YES signalled YES None None Received Valentino 14 Certified Area RMB CN None YES signalled 0.75 13% YES signalled YES CN None Yang Yang (Events) Bottega Veneta 19 Certified Area RMB CN Special collection / video for CN New Year YES signalled 0.92 0% YES signalled YES CN None None Gift guide for CN New Year Shanghai Tang 20 No Certified Link RMB CN YES signalled 1.42 41% YES signalled NO CN / EN None None Traditional Chinese dresses (Qipao) No product page on No Email Ralph Lauren 21 Certified Link CN New Year Wishes for CN Customers YES 3.25 44% YES YES None None Chinese Website Received Swatch 21 No Certified Link No Price CN Gift guide / video for CN New Year YES signalled 0.83 22% YES signalled YES CN None None Tod's 21 Certified Link RMB CN None YES 1.08 22% YES signalled YES CN None None CN (Editorial Welcome Email Tory Burch 24 Certified Link USD focus), EN New Year Wishes for CN Customers YES signalled 2.25 30% YES signalled YES None None Only (CN) (Ecommerce) Zegna 25 Certified Area No Price CN None YES 1.08 37% YES signalled YES CN None Jing Boran (Events) Brunello Cucinelli 26 No Certified Link RMB CN None YES 1.33 31% YES NO CN None Liu Tao (Events) Hermès 26 Certified Area No Price CN None YES 2.25 44% YES YES CN None None Prada 28 Certified Area No Price CN None YES signalled 2.33 14% YES signalled NO CN None None Tiffany 28 Certified Link No Price CN None YES 1.33 42% YES signalled NO CN None Ni Ni Balenciaga 30 Certified Area RMB CN None YES 0.92 0% YES signalled NO CN None None Saint Laurent 30 Certified Link RMB CN None YES signalled 0.92 0% YES signalled NO CN None None

CN (Editorial Givenchy 32 Certified Link GBP focus), EN None YES signalled 1.00 8% YES signalled YES CN None Chris Lee (Ecommerce)

Welcome Email Loro Piana 33 Certified Area EUR CN None YES 0.33 0% YES NO None None Only (CN) Welcome Email Céline 34 Certified Link EUR CN None NO No WeChat Account No WeChat Account NO NO None None Only (CN)

WeChat Account Weibo Account Brand Area Box RMB Above 40% of post Chinese YES signalled on Brand Above 2 posts per week signalled on Brand web Yes, Account on Youku Chinese YES YES (Websites, Social Media, Emails…) (Certified by Baidu) (Chinese currency) with local content web page page Mixed WeChat Account not Weibo Account not English/Welcome Text Description Between 10% and USD / EUR / GBP Chinese- signalled on Brand 0,5 - 2 posts per week signalled on Brand web Email Only (Certified by Baidu) 40% English web page page (Chinese) No China country Text Not Certified by Marginal (below No prices English NO No Account Below 0.5 posts per week No Official Account No option for NO NO Baidu 10%) newsletter Source: Contactlab Analysis

Exane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 28

Figure 44: Baidu Search Engine: Example Chanel Certified Brand Area Box

Source: Contactlab Analysis

Figure 45: Baidu Search Engine: Example of Ray-Ban Certified Text Description

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 29

Figure 46: Shanghai Tang giving attention to Chinese heritage, with its Luxury Iconic Qipao dresses Local Content on Website – The example of Shanghai Tang

Source: Contactlab analysis

Figure 47: Ray-Ban gives particular attention to the Asian market via eyewear customization Local Content on Website - The example of Ray-ban

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 30

Figure 48: Hugo Boss best practice Chinese New Year campaign with Chinese Celebrity Huo Jianhua on Website and WeChat Local Content on Website – The example of Hugo Boss

Source: Contactlab Analysis

Figure 49: Burberry features local celebrity Kris Wu Local Content on Website – The example of Burberry

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 31

Figure 50: Chinese New Year special collection and gift guide. QR code allows customers to explore more about the collection via mobile Local Content on Website – The example of Bottega Veneta

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 32

Figure 51: WeChat account (1/2) The example of Tiffany

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 33

Figure 52: WeChat account (1/2) The example of Valentino

Source: Contactlab Analysis

Figure 53: Valentino website – signalling WeChat, Weibo and Youku icons on homepage

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 34

Figure 54: Pop-up highlighting Newsletter and WeChat Following The example of Fendi website

Source: Contactlab Analysis

Figure 55: Local Event on WeChat (1/2) The example Gucci – ‘GHOST’ Event in Chengdu

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 35

Figure 56: Local Event on WeChat (2/2) The example of Hermès – Party in Shanghai

Source: Contactlab Analysis

Figure 57: Local Shopping Day on WeChat The example of Coach – Single Day voucher (11 Nov)

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 36

Figure 58: Weibo Account The example of Michael Kors

Source: Contactlab Analysis

Figure 59: YouKu account The example of Bulgari

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 37

Figure 60: Young generations show an increasing interest in Fashion & Luxury Newsletters % of Subscribers to Fashion & Luxury Newsletters by Age (China, % respondents)

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0 16-24 25-34 35-44 45-54 54+

Source: Contactlab European (+) Digital Behaviour Study 2016

Figure 61: Local Event on Newsletter The example Bulgari – Wishes for Mid-Autumn Festival

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 38

Figure 62: Local Shopping Day on Newsletter The example of Armani Single Day sales (11 Nov)

Source: Contactlab Analysis

Figure 63: Drive to Store on Newsletter The example of Hugo Boss

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 39

Figure 64: Use of major local celebrities & fashion blogger: Jing Boran The example of Louis Vuitton Newsletter for New Collection launch

Source: Contactlab Analysis

Figure 65: Use of major local celebrities & fashion blogger: singer/actor Kris Wu The example Ray-Ban Limited Edition Sunglasses on Newsletter

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 40

Figure 66: Use of major local celebrities & fashion blogger: actor Hu Ge The example for Chanel No.5 campaign on WeChat

Source: Contactlab Analysis

Figure 67: Use of major local celebrities & fashion blogger: actress Fan Bingbing The example of Cartier at its Magicien Jewelry Exhibition in Shanghai

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 41

Figure 68: Use of major local celebrities & fashion blogger: singer Chris Lee The example of Gucci on WeChat

Source: Contactlab Analysis

Figure 69: Use of major local celebrities & fashion blogger: Gogoboi (fashion blogger) The example Fendi Social Campaign on Weibo

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 42

Digital experience for Chinese Customers

Figure 70: Michael Kors, Burberry and Cartier leading the Digital Customer Experience axis. Namely, Burberry, Louis Vuitton and Dior excelling in Style Advisory. Cross-Channel Services still quite neglected in China, only Burberry and Loro Piana standing out Digital Experience Axis – Overall Brand Ranking (China, January 2017)

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 43

Figure 71: Only Prada and Moncler requiring flash plug-in for videos (1/2) Digital Experience Axis – Display Visualization on China Websites (China, January 2017)

DISPLAY VISUALIZATION ON CHINA WEBSITES

Brand Ranking Flash Plug-In Required for Videos Mobile adapted website Armani 1 NO YES Balenciaga 1 NO YES Bottega Veneta 1 NO YES Brunello Cucinelli 1 NO YES Bulgari 1 NO YES Burberry 1 NO YES Cartier 1 NO YES Céline 1 NO YES Chanel 1 NO YES Coach 1 NO YES Dior 1 NO YES Dolce & Gabbana 1 NO YES Fendi 1 NO YES Ferragamo 1 NO YES Givenchy 1 NO YES Gucci 1 NO YES Hermès 1 NO YES Hugo Boss 1 NO YES Loro Piana 1 NO YES Louis Vuitton 1 NO YES Michael Kors 1 NO YES Ralph Lauren 1 NO YES Ray-Ban 1 NO YES Saint Laurent 1 NO YES Swatch 1 NO YES Tiffany 1 NO YES Tod's 1 NO YES Tory Burch 1 NO YES Valentino 1 NO YES Zegna 1 NO YES Chow Tai Fook 1 NO YES Shanghai Tang 1 NO YES Moncler 32 Optional (Video) YES Prada 32 Optional (Video) YES

Not required Yes adapted Required for videos Partially adapted (some horizontal scrolling, only some pages) Required for website visualization Not adapted Source: Contactlab Analysis

Figure 72: Only Prada and Moncler requiring flash plug-in for videos (2/2)

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 44

Figure 73: The example Chow Tai Fook desktop and mobile adapted websites

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 45

Figure 74: Only four brands integrate product pages with videos. Ray-Ban offering virtual mirror. Model measure less adopted than in US Digital Experience Axis – Product Presentation on China Websites (China, January 2017)

PRODUCT PRESENTATION ON CHINA WEBSITES Pictures from different Brand Ranking Video with worn products Zoom on Details Model measures angles Burberry 1 YES (Selected products) YES YES YES Loro Piana 1 YES (Selected products) YES YES (mouseover) NO Ray-Ban 3 Virtual mirror YES YES n.a (no RTW) Tory Burch 3 YES (Selected products) YES YES NO Zegna 3 NO YES YES (mouseover) YES Armani 6 NO YES YES YES Balenciaga 6 NO YES YES YES Bulgari 6 NO Yes (Selected products) YES (mouseover) n.a (no RTW) Dolce & Gabbana 6 NO YES YES YES Ferragamo 6 NO YES YES (mouseover) n.a (no RTW on web) Givenchy 6 NO YES YES YES Gucci 6 NO YES YES YES Hugo Boss 6 NO YES YES (mouseover) NO (vs YES US) Michael Kors 6 NO YES YES (mouseover) NO (vs YES US) Tiffany 6 NO Yes (Selected products) YES (mouseover) n.a (no RTW) Valentino 6 NO YES YES YES Shanghai Tang 6 NO YES (Model and mannequin) YES (mouseover) NO Bottega Veneta 18 NO YES YES NO Brunello Cucinelli 18 NO YES YES NO (vs YES US) Cartier 18 NO YES YES n.a (no RTW) Chanel 18 NO YES YES NO Coach 18 NO YES YES NO (vs YES US) Dior 18 NO YES YES NO Louis Vuitton 18 NO YES YES NO Moncler 18 NO YES YES NO Prada 18 NO YES YES n.a (no RTW on web) Saint Laurent 18 NO Yes (Selected products) YES NO Tod's 18 NO YES YES n.a (no RTW on web) Fendi 29 NO YES NO n.a (no RTW on web) Swatch 29 NO Yes (Selected products) NO n.a (no RTW) Chow Tai Fook 29 NO YES NO n.a (no RTW) Céline 32 NO NO YES NO Hermès 32 NO NO YES n.a (no RTW on web) No product page on Chinese No product page on Chinese No product page on No product page on Ralph Lauren 34 Website Website Chinese Website Chinese Website

Offered Offered Offered with mouseover Offered Offered with click Not offered Not offered Not offered Not offered Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 46

Figure 75: Ray-Ban offering Virtual Mirror tool, with two options: models and self

Source: Contactlab Analysis

Figure 76: Shanghai Tang offering two types of product views: model and mannequin

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 47

Figure 77: Coach and Tory Burch leading, closely followed by Chow Tai Fook, Loro Piana, Louis Vuitton. Very important customer reviews for the Chinese market offered only by Chow Tai Fook, Coach and Tory Burch (although from the US, not Chinese website) Digital Experience Axis – Product Selection Support on China Websites (China, January 2017)

PRODUCT SELECTION SUPPORT ON CHINA WEBSITES You might also like Match with, Recently Shop/discover the Brand Ranking Wishlist (same product Complete the Shop by Occasion Size guide table Customers Reviews viewed Look category) Look Coach 1 YES YES YES YES NO NO YES CN (Reviews) Tory Burch 1 YES YES YES YES YES YES (eg. Workweek Chic / Parties & Events) YES EN (Rating and reviews) Chow Tai Fook 3 YES YES YES NO n.a YES (eg. Bridal Collection) YES CN (Rating and reviews) Loro Piana 4 YES NO YES YES YES YES (eg. Skiing / Sailing / Vintage Cars) YES Louis Vuitton 4 YES YES YES YES YES NO YES (Shoes only) Cartier 6 YES NO YES YES n.a YES (eg. Bridal Collection) YES Brunello Cucinelli 7 YES NO NO YES YES NO YES Bulgari 7 YES NO YES YES n.a YES (eg. Bridal Collection) NO (vs YES in US) Burberry 7 NO (vs YES in US) NO YES YES YES YES (eg. Winter Weekend / Night Wear) YES Dolce & Gabbana 7 YES YES NO YES NO NO YES Michael Kors 7 YES NO YES YES NO NO (vs YES in US) YES Armani 12 YES NO YES NO YES NO YES Balenciaga 12 YES NO NO YES NO NO YES Chanel 12 YES NO YES YES (Beauty) YES NO NO Hugo Boss 12 YES YES NO NO NO (coming soon) YES (eg. Travel Collection) YES Valentino 12 YES NO NO YES NO NO YES Givenchy 17 NO NO NO YES YES NO YES Gucci 17 NO (vs YES in US) YES NO YES YES NO NO (vs YES in US) Moncler 17 YES YES NO (vs YES in US) NO NO NO YES Tiffany 17 YES NO YES NO n.a YES (eg. Engagement / Wedding Collection ) NO (vs YES in US) Tod's 17 YES NO YES NO NO NO YES Shanghai Tang 17 NO NO NO YES NO YES (eg. Wedding / Graduation gift options) YES Dior 23 NO YES YES YES (Beauty) NO NO NO Ferragamo 23 YES NO NO NO NO NO YES Ray-Ban 23 YES NO YES n.a n.a n.a NO NO (vs YES in Swatch 23 YES YES n.a n.a n.a NO US) NO (vs YES in Saint Laurent 27 NO (vs YES in US) YES NO (vs YES in US) NO NO YES US) Zegna 27 NO NO NO NO YES NO YES Hermès 29 YES (Scarves) NO YES (Scarves) NO NO (vs YES in US) NO (vs YES in US) NO Bottega Veneta 30 NO (vs YES in US) NO NO (vs YES in US) NO YES NO NO (vs YES in US) Céline 30 NO NO NO NO YES NO NO NO (vs YES in NO (vs YES in Fendi 32 NO (vs YES in US) NO (vs YES in US) NO NO NO (vs YES in US) US) US) Prada 32 NO NO NO NO NO NO NO No product No product page No product page No product page No product page page on No product page on Ralph Lauren 32 on Chinese on Chinese on Chinese No product page on Chinese Website on Chinese Chinese Chinese Website Website Website Website Website Website

Offered Offered Offered Offered Offered Offered Offered YES, in Chinese Partial YES, in English Not offered Not offered Not offered Not offered Not offered Not offered Not offered NO Source: Contactlab Analysis

Figure 78: Example Zegna offering “Discover the look”

Source: Contactlab Analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 48

Figure 79: Example Burberry offering “Shop by Occasion” (Winter Weekend)

Source: Contactlab analysis

Figure 80: Example Shanghai Tang offering “Shop by Occasion” (Graduation gifts)

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 49

Figure 81: Example Chow Tai Fook offering detailed “Size Guide”

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 50

Figure 82: Example Shanghai Tang “Size Guide” table

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 51

Figure 83: Example Chow Tai Fook offering customers “Product Reviews and Rating”

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 52

Figure 84: Example Coach offering “Customers Reviews”

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 53

Figure 85: Only Chow Tai Fook and six International brands offer Online Chat in Chinese Digital Experience Axis – Basic Customer Service on China Websites (China, January 2017)

BASIC CUSTOMER SERVICE ON CHINA WEBSITES*

Phone Email Brand Ranking Web Online Chat Assistance Assistance Chanel 1 CN CN CN Coach 1 CN CN CN Dior 1 CN (Fashion) CN CN Hugo Boss 1 CN CN CN Michael Kors 1 CN CN CN Ray-Ban 1 CN CN CN Chow Tai Fook 1 CN CN CN Loro Piana 8 EN CN CN Tory Burch 9 EN EN EN Shanghai Tang 10 NO CN CN Armani 10 NO CN CN Bulgari 10 NO CN CN Burberry 10 NO CN CN Cartier 10 NO CN CN Fendi 10 NO CN CN Ferragamo 10 NO CN CN Givenchy 10 NO CN CN Gucci 10 NO CN CN Louis Vuitton 10 NO CN CN Ralph Lauren 10 NO CN CN Swatch 10 NO CN CN Tod's 10 NO CN CN Valentino 10 NO CN CN Balenciaga 24 NO CN Not active Moncler 24 NO CN Not active Bottega Veneta 26 NO NO CN Brunello Cucinelli 26 NO NO CN Dolce & Gabbana 26 NO NO CN Tiffany 26 NO NO CN Zegna 26 NO NO CN Céline 31 NO NO NO Hermès 31 NO NO NO Prada 31 NO NO NO Saint Laurent 31 NO NO NO *Product availability, delivery, payment…

Offered in Offered in Offered in Chinese Chinese Chinese Offered in Offered in Offered in English English English

Not Offered Not Offered Not Offered

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 54

Figure 86: Burberry giving lots of attentions on Customer Service (phone, Weibo, WeChat, Email) in Chinese

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 55

Figure 87: Dior very complete Customer Service (Email, chat, phone) in Chinese

Source: Contactlab analysis

Figure 88: Chanel example “Online Chat ’’ in Chinese

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 56

Figure 89: Louis Vuitton not offering “Assistant via Chat ’’ in China, vs yes in US

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 57

Figure 90: Overall Cartier leading, followed by Dior and Hugo Boss. Burberry excelling for Style Advisory completeness, including Weibo. Overall Made to Measure services well developed, Style Advisor and Book an Appointment less Digital Experience Axis – Personal Services on China Websites (China, December 2016)

PERSONAL SERVICES ON CHINA WEBSITES

Style Advisor: Style Advisor: Style Advisor: Style Advisor: Style Advisor: Book an Appointment Brand Ranking Make to Order Online Chat* Phone Assistance* E-mail Assistance* WeChat Assistance* Weibo* in Chinese Stores

Cartier 1 NO CN Extra Effort CN (Refer to phone) Extra Effort NO YES After Service - jewelry engraving/polishing/resizing/restoration/pairing (offline) Dior 2 CN Extra Effort CN Extra Effort CN Extra Effort NO NO YES Personalization: add charms "Lucky Badge" to bags (offline) Hugo Boss 3 CN CN No Reply NO NO YES (Made to measure) Made-to-measure (offline) Burberry 4 NO CN Extra Effort CN Extra Effort Extra Effort YES NO Monogramming scarves & perfumes (online) Louis Vuitton 4 NO CN Extra Effort CN Extra Effort Extra Effort NO NO Initials on leather goods by stamping or printing (online); make-to-order shoes (offline) Michael Kors 6 CN CN No Reply Extra Effort NO NO Customized bag collection (online) YES (personalized look Valentino 7 NO NO NO Bag strips and initials(offline) CN (Refer to WeChat) YES and tailoring service) Ray-Ban 8 CN CN CN Extra Effort NO NO NO Customized sunglasses (online) Armani 9 NO NO CN NO NO YES (Made to measure) Made-to-measure (offline) Loro Piana 9 EN CN Extra Effort CN NO NO NO Made To Measure Services: suits/Jackets, Shirts, Men's Knitwear, Ties Zegna 11 NO NO CN (Refer to store) NO NO YES Made-to-measure (offline) Fendi 12 NO CN Extra Effort CN (Refer to store/WeChat/NL) NO NO NO Made-to-measure (offline) Chanel 13 CN Extra Effort CN Extra Effort CN (Refer to store) NO NO NO NO CN (Refer to online Coach 13 NO NO NO chat / store) CN Extra Effort Initials on Chinese website/stores Ferragamo 15 NO CN No Reply NO NO NO Made to Measure shoes (offline) Bottega Veneta 16 NO NO CN (Refer to store) NO NO NO Customized(material, colors) and Monogramming: bags, SLG (offline) Tiffany 16 NO NO CN (Refer to store) NO NO YES (Diamond Expert) NO Tod's 16 NO No Reply CN (Refer to store) NO NO NO Made to Measure shoes (offline) Shanghai Tang 16 NO NO EN NO NO NO Made-to-measure (offline) Balenciaga 20 NO NO Not active NO NO YES NO Prada 20 NO NO NO NO NO NO Made-to-measure (offline) Yes (Product consultant Swatch 20 NO No Reply NO NO NO NO for specific product) Bulgari 23 NO CN (Refer to store) No Reply YES NO NO Jewelry and pen engraving (offline) Chow Tai Fook 23 CN CN (Refer to store) No Reply NO NO NO Jewelry engraving on Chinese website/stores Tory Burch 25 EN EN EN NO NO NO Made to Order: add initials to bags , SLG / Add charm to bags (online) Brunello Cucinelli 26 NO NO CN Extra Effort NO NO NO NO Gucci 26 NO CN (Refer to store) NO NO NO NO Initials for SLGs (offline) Céline 28 NO NO NO No WeChat Account NO NO NO Dolce & Gabbana 28 NO NO NO NO NO NO NO Givenchy 28 NO NO No Reply NO NO NO NO Hermès 28 NO NO NO NO NO NO NO Moncler 28 NO NO Not active NO NO NO NO Ralph Lauren 28 NO NO No Reply NO NO NO NO Saint Laurent 28 NO NO NO NO NO NO NO * tested in December 2016

Offered in Chinese Offered in Chinese Offered in Chinese Extra effort Yes Offered at Chinese stores Products on Chinese website / stores

Support for refer to Offered in English/ Offered in English Offered Initials on Chinese website / stores store Refer to store Not Offered at Chinese Not Offered Not Offered Not Offered Not Offered No Not Offered in China stores Source: Contactlab analysis

Exane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 58

Figure 91: Style Advisory while shopping particularly relevant for Chinese Customers Being able to contact a style advisor via chat, email or phone while shopping online (% of respondents)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% WW Customers Chinese Customers

Extremely+Very important Extremely+Very+ Quite important

Source: Contactlab European (+) Digital Behaviour Study 2016

Figure 92: Dior best practice in “Style Advisory via Online Chat’’ with link for product suggestions

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 59

Figure 93: Louis Vuitton best practice in “Style Advisory via Phone’’, followed by SMS with links for product suggestions

Source: Contactlab analysis

Figure 94: Dior extra effort in “Style Advisory via Email” for argumentation

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 60

Figure 95: Brunello Cucinelli extra effort in “Style Advisory via Email’’: suggested products also with photos in boutique. In addition, follow-up email after one week

Source: Contactlab analysis

Figure 96: Cartier best practice in “Style Advisory via WeChat’’: suggested products with images and prices

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 61

Figure 97: Michael Kors best practice in “Style Advisory via WeChat’’: suggested products with images and prices

Source: Contactlab analysis

Figure 98: Burberry best practice in “Style Advisory via Weibo’’: suggested products with link to website

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 62

Figure 99: Zegna best practice in “Book an Appointment’’: Try on in store’ with possibility to select Boutique and Timing

Source: Contactlab analysis

Figure 100: Swatch example “Book an Appointment’’ 1-to-1 free consultant service

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 63

Figure 101: Ray-Ban best practice in Customization: choices of lenses, frames and case. Also possibility to engrave messages on frames

Source: Contactlab analysis

Figure 102: Prada offering “Made to Measure’’ service

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 64

Figure 103: Bottega Veneta “Customization Atelier’’ service

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 65

Figure 104: Hugo Boss offering “Made to Measure’’ service combined with Book an Appointment

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 66

Figure 105: Shanghai Tang offering “Made to Measure’’ service

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 67

Figure 106: American brands Michael Kors and Coach plus Chow Tai Fook leading the easiness of the online shopping experience. Alipay and Cash on Delivery widely adopted, while only Ferragamo, Chanel, and Dior offer WeChat Pay among European brands. Only Chow Tai Fook offering Instalment payment Digital Experience Axis – Online Shopping on China Websites (China, January 2017)

ONLINE SHOPPING ON CHINA WEBSITES Video in homepage Shop evidence Minimum clicks Extra effort Brands Ranking without slowing down E-commerce mobile Price Evidence Quick Buy Option Alipay WeChat Pay PayPal Cash on delivery on Chinese Homepage to shopping bag (Installment…) Purchasing Process Michael Kors 1 YES HIGH 3 YES YES YES YES YES NO YES Coach 2 NO HIGH 3 YES YES YES YES YES NO YES Chow Tai Fook 2 NO HIGH 3 YES YES YES YES YES NO NO Installment Chanel 4 YES HIGH 2 YES YES YES YES YES NO NO Balenciaga 5 NO HIGH 3 YES YES (mouseover) YES YES NO NO YES Cartier 5 NO HIGH 3 YES YES (mouseover) YES YES NO NO YES Dior 5 YES NO 3 YES YES (Beauty) YES YES YES NO YES Ferragamo 5 NO HIGH 3 YES YES (mouseover) NO (vs YES in US) YES YES NO NO Shanghai Tang 9 NO HIGH 3 YES YES YES YES NO NO YES Burberry 10 YES HIGH 3 YES YES YES YES NO NO NO Dolce & Gabbana 10 YES (animation) HIGH 3 YES YES YES YES NO NO NO Hugo Boss 12 NO HIGH 3 YES YES NO (vs YES in US) YES NO NO YES Moncler 12 NO HIGH 3 YES YES NO (vs YES in US) YES NO NO YES Ray-Ban 12 NO HIGH 3 YES YES YES YES NO NO NO Tod's 12 NO HIGH 3 YES YES YES YES NO NO NO Valentino 12 NO HIGH 3 YES YES NO (vs YES in US) YES NO NO YES Armani 17 NO HIGH 4 YES YES NO (vs YES in US) YES NO NO YES Brunello Cucinelli 17 NO HIGH 4 YES YES YES YES NO NO NO Tory Burch 17 YES HIGH 3 YES YES YES NO NO YES NO Loro Piana 20 YES (animation) HIGH 2 YES YES NO NO NO NO YES Givenchy 21 YES HIGH 3 YES (IOS APP) YES (only app) YES NO NO YES NO Bottega Veneta 22 YES (animation) no China ecommerce no China ecommerce no China ecommerce YES (mouseover) no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Bulgari 22 YES no China ecommerce no China ecommerce no China ecommerce YES (mouseover) no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Saint Laurent 22 YES no China ecommerce no China ecommerce no China ecommerce YES (mouseover) no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Céline 25 YES no China ecommerce no China ecommerce no China ecommerce YES no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Hermès 26 YES (animation) no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Louis Vuitton 26 NO no China ecommerce no China ecommerce no China ecommerce YES no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Prada 26 YES no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce No product page on Ralph Lauren 26 YES no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Chinese Website Tiffany 26 YES (animation) no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Zegna 26 NO no China ecommerce no China ecommerce no China ecommerce YES no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Fendi 32 NO no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Gucci 32 NO no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Swatch 32 NO no China ecommerce no China ecommerce no China ecommerce NO no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce

Yes displayed on Partial screen video, not Shop button or E-store product page and on 2-3 click Via Web Offered Offered Offered Offered Offered Offered interfering on Homepage button category page with mouseover Yes displayed on product page and/or on No video on Homepage Shopping bag 4-5 clicks Only via App category page without mouseover Full screen video and No E-commerce always interfering (skip) More than 5 clicks Not feasible Not displayed Not offered Not offered Not offered Not offered Not offered Not offered evidence on Homepage Source: Contactlab analysis

Exane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 68

Figure 107: Ferragamo, one of the few Western brands offering WeChat Pay

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 69

Figure 108: Chow Tai Fook offering Instalment Payment

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 70

Figure 109: Only six players offering fast delivery within three days. However, brands importing from European warehouses cannot assure quick delivery Digital Experience Axis – Delivery options in China Websites (China, January 2017)

DELIVERY OPTIONS IN CHINA Brands Ranking Free shipping (Standard) Standard Delivery Express Delivery Same/Next Day Delivery Weekend Delivery Hugo Boss 1 Free above 3000 RMB 3-5 working days 1-3 WORKING DAYS NO YES Michael Kors 2 YES 2-5 working days Not Offered Same Day (for Shanghai) NO Coach 3 NO 1-5 days (with SF courier) Not Offered NO YES Dior 3 YES 1-2 days Not Offered NO NO Ferragamo 3 YES 5-7 working days Not Offered NO YES Tod's 3 YES 1-3 days Not Offered NO NO Armani 7 NO (50 RMB) 3-5 working days 1-2 WORKING DAYS NO NO Brunello Cucinelli 7 YES Within 5 working days Not Offered NO NO Burberry 7 YES 1-5 days after shipping Not Offered NO NO Chanel 7 YES 1-5 days Not Offered NO NO Givenchy 7 NO (15 USD) 2-3 working days Not Offered NO NO Moncler 7 NO (50 RMB) 3-5 working days 1-2 WORKING DAYS NO NO Cartier 13 YES Within 7 days Not Offered NO NO Dolce & Gabbana 13 NO (260 RMB) 3-4 working days Not Offered NO NO Loro Piana 13 NO Within 5 days Not Offered NO NO Ray-Ban 13 YES 2-7 working days Not Offered NO NO Chow Tai Fook 13 YES shipped within 72 hours, arrival not specified Not Offered NO NO Shanghai Tang 18 Free over 2000 RMB Within 7 working days Not Offered NO NO Balenciaga 19 NO (100 RMB) 11-15 working days arrive, shipped from Italy Not Offered NO NO Tory Burch 19 NO shipped in 1-2 working days, arrival not specified Not Offered NO NO Valentino 19 NO (95 RMB) 11-15 working days Not Offered NO NO Bottega Veneta 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Bulgari 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Céline 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Fendi 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Gucci 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Hermès 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Louis Vuitton 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Prada 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Ralph Lauren 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Saint Laurent 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Swatch 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Tiffany 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce Zegna 19 no China ecommerce no China ecommerce no China ecommerce no China ecommerce no China ecommerce

Free with no tickets limits maximum 3 days Offered Same day All China Free above Ticket Treshold maximum 5 days Next day Selected areas Always paid 5 or more / not declared Not offered Not offering Not offered Source: Contactlab analysis

Figure 110: Example Balenciaga long delivery times from Europe

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 71

Figure 111: Only Michael Kors offering Same Day Delivery

Source: Contactlab analysis

Figure 112: Coach offering many delivery options, including Weekend Delivery, and preview of free gift packaging

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 72

Figure 113: Example Chanel different delivery time can vary by destination

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 73

Figure 114: Louis Vuitton and Ralph Lauren leading, followed by Givenchy Digital Experience Axis – Store Finder (China, January 2017)

STORE FINDER Ask for Client Ask for Client Identification on Store Segmentation Phone Referral in Brand Ranking Visibility Store Search Localization on Localization on Map Print Photo boutique Opening day/hours Email to Store Homepage Details number store Desktop Mobile Louis Vuitton 1 Boutiques HIGH Manually prompted YES YES Products/Service YES NO Specific Sphoto (most stores) YES YES NO NO Ralph Lauren 1 Boutique locator HIGH Automatic YES YES Brand/Gender/Products YES NO NO YES YES NO NO Swatch 3 Store locator HIGH Automatic YES YES Service YES YES NO YES YES NO NO Burberry 4 Store locator HIGH Automatic YES YES Service/Products/Gender YES NO NO YES YES NO NO Cartier 4 Store locator HIGH Manually prompted YES YES Products/Service YES NO Generic photo YES YES YES NO Givenchy 4 Stores HIGH Manually prompted NO YES Products/Gender YES YES Specific Sphoto (most stores) YES YES NO NO Gucci 4 Boutique locator LOW Automatic YES YES Gender/Products YES YES Generic photo YES YES NO NO Chanel 8 Store locator MEDIUM Automatic YES YES Products YES YES NO YES YES NO NO Fendi 8 Fendi store locator HIGH Manually prompted YES YES Products/Gender YES NO Specific photo (few stores) YES YES NO NO Bottega Veneta 10 Boutique locator LOW Automatic YES YES Gender/Products YES NO NO YES YES NO NO Dior 10 Boutiques LOW Manually prompted YES YES Products/Gender/Service YES YES Generic photo YES YES NO NO Michael Kors 10 Boutique Guide HIGH Automatic YES YES NO YES NO NO YES NO NO NO Tod's 10 Boutiques HIGH Automatic NO NO Service/Products YES NO NO YES YES YES NO Tory Burch 10 Find a Store HIGH Automatic YES YES NO YES NO NO YES YES NO NO Loro Piana 15 Store locator HIGH Manually prompted NO NO Service YES NO Specific drawing YES YES NO Store Manager Moncler 15 Boutiques HIGH Manually prompted NO YES Gender YES NO NO YES NO YES NO Armani 17 Stores HIGH Manually prompted YES YES Brand/Gender YES NO NO YES NO NO NO Balenciaga 17 Boutiques HIGH Automatic NO NO Gender/Products NO NO NO YES YES YES NO Coach 17 Boutiques HIGH Automatic NO NO Products/Gender/Service YES NO NO YES YES NO NO Hermès 17 Nearest Boutique HIGH Manually prompted YES NO NO YES YES NO YES YES NO NO Saint Laurent 21 Boutique locator MEDIUM Manually prompted NO YES Gender/Products NO NO Specific photo (few stores) YES YES NO NO Zegna 21 Store locator HIGH Manually prompted NO NO Service YES YES NO YES YES YES NO Shanghai Tang 21 Store locator HIGH Automatic NO NO NO YES YES Specific photo (few stores) YES YES NO NO Ray-Ban 24 Store locator HIGH Manually prompted YES YES NO YES NO NO YES NO NO NO Tiffany 24 Boutiques HIGH Manually prompted NO NO NO YES NO Specific Sphoto (most stores) YES YES NO NO Valentino 24 Store locator HIGH Automatic NO NO Gender/Products/Service YES NO NO YES YES NO NO Bulgari 27 Store locator HIGH Automatic YES NO Products YES NO NO YES NO NO NO Dolce & Gabbana 28 Store locator LOW Manually prompted YES YES NO YES YES NO YES NO NO NO Prada 28 Find a boutique LOW Manually prompted YES NO Gender/Products YES NO NO YES YES NO NO Brunello Cucinelli 30 Boutiques LOW Manually prompted NO NO NO YES YES NO YES YES NO NO Céline 30 Boutiques MEDIUM Manually prompted NO NO NO YES NO NO YES YES NO NO Gender/Products/Made to Hugo Boss 30 Store locator HIGH Automatic NO NO YES NO NO NO NO NO NO measure Chow Tai Fook 33 Store locator HIGH Manually prompted NO NO NO NO NO NO YES YES NO NO Ferragamo 34 Stores HIGH Manually prompted NO NO NO NO NO NO YES NO NO NO

High: no scrolling, Phone "Luxury Goods" Shows Allow map Opening Hours available E-mail to Store Contact large font, specific Automatic Requested Requested Two criteria Specific Store picture Number naming Map printing (excluding SIS locations) possible provided banner available

Medium: no Minimum scrolling, no drop Specific Store picture for Selected stores personalization One criteria down menu, small selected locations (excluding SIS locations) namining font

Low: scrolling, No Phone Opening Hours not "Mass Market" No map E-mail to Store drop down menu, Manually prompted Not requested Not requested No criteria No map No picture or generic photo Number not mentioned (excluding No contact naming printing not possible footer available SIS locations)

Source: Contactlab analysis

Exane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 74

Figure 115: Chow Tai Fook very visible Store Locator in Homepage

Source: Contactlab analysis

Figure 116: Givenchy Store Finder with specific Store Picture (example Plaza 66, Shanghai)

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 75

Figure 117: Shanghai Tang Store Finder with specific Store Picture in Shanghai and Hong Kong

Source: Contactlab analysis

Figure 118: Loro Piana with specific Boutique Drawing and Referral In-Store also on Chinese Website

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 76

Figure 119: Cross-channel services appear very neglected by most brands Digital Experience Axis – Cross Channel Services in China, January 2017

CROSS CHANNEL SERVICES IN CHINA

In Store Availability on Chinese Brand Ranking Collect in Store Return in Store Product exchange Websites

Burberry 1 YES YES NO NO (vs YES in US, Korea, and Russia) YES Loro Piana 1 NO NO Online & In-store (Beijing, Shanghai) (Beijing, Shanghai ) Chow Tai Fook 3 NO YES NO Online Balenciaga 4 YES (Check via Email; Reserve) NO NO NO Cartier 4 NO YES NO NO

Coach 4 NO NO NO Online & In-store

Brunello Cucinelli 7 NO NO NO Online (Size & Color) Givenchy 7 NO NO NO Online (size) Michael Kors 7 NO NO NO Online Shanghai Tang 7 NO NO NO Online (Size & Color) no China ecommerce Bulgari 11 NO YES on temporary sale no China ecommerce no China ecommerce on WeChat Armani 12 NO NO NO NO Chanel 12 NO NO NO NO Dior 12 NO NO NO NO Dolce & Gabbana 12 NO NO NO NO Ferragamo 12 NO NO NO NO Hugo Boss 12 NO NO NO NO Moncler 12 NO NO NO NO Ray-Ban 12 NO NO NO NO Tod's 12 NO NO NO NO Tory Burch 12 NO NO Not specified NO Valentino 12 NO NO NO NO Bottega Veneta 12 NO no China ecommerce no China ecommerce no China ecommerce

Céline 12 NO no China ecommerce no China ecommerce no China ecommerce

Fendi 12 NO no China ecommerce no China ecommerce no China ecommerce Gucci 12 NO no China ecommerce no China ecommerce no China ecommerce Hermès 12 NO no China ecommerce no China ecommerce no China ecommerce Louis Vuitton 12 NO no China ecommerce no China ecommerce no China ecommerce Prada 12 NO no China ecommerce no China ecommerce no China ecommerce Saint Laurent 12 NO no China ecommerce no China ecommerce no China ecommerce Swatch 12 NO no China ecommerce no China ecommerce no China ecommerce Tiffany 12 NO no China ecommerce no China ecommerce no China ecommerce Zegna 12 NO no China ecommerce no China ecommerce no China ecommerce No product page on Chinese Ralph Lauren 12 no China ecommerce no China ecommerce no China ecommerce Website

Broadly offered Broadly offered Offered Offered online & in-store, or only in-store Offered in selected Offered in selected stores only Offered only online stores only Not offered Not offered Not offered Not offered Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 77

Figure 120: Bulgari offering Collect In Store on temporary WeChat sales

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 78

Figure 121: Loro Piana offering Return/Exchange In-Store service in six boutiques in Beijing and Shanghai

Source: Contactlab analysis

Figure 122: Coach offering Online and In-Store Product Exchange service in China

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 79

Figure 123: Balenciaga, Burberry, Gucci and Valentino best positioned. Responsive layout used only by eight brands. Some major brands prefer not to highlight western socials on Emails Digital Experience Axis – Email Proficiency for Chinese Customers (China, January 2017)

E-MAIL PROFICIENCY FOR CHINESE CUSTOMERS Rankin Link between Product on Email Brand Mobile Responsive Video or Gif Male / Female Segmentation Navigation Bar Bookmarks on Emails g and Web Landing Page Balenciaga 1 Responsive Never / Sporadic Frequent YES Category Page Weibo and Youku Burberry 1 Responsive Never / Sporadic Frequent Never Mix Product Category WeChat with QR code; Weibo; Youku Gucci 1 Not responsive Frequent Frequent YES Mix Product Category Weibo, Youku Valentino 1 Not responsive Frequent Frequent YES Mix Product Category Instagram, Facebook, Twitter, Youtube, Snapchat, Pinterest, WeChat, Weibo, Youku Armani 5 Responsive Sometimes Sometimes Never Mix Product Category WeChat with QR code; Weibo; Youku Dior 5 Responsive Sometimes Sometimes Never Mix Product Category Weibo Louis Vuitton 5 Adaptive Sometimes Frequent YES Category Page WeChat, Weibo, Pinterest, LV Pass, Instagram, Youku Chanel 8 Adaptive Frequent Sometimes Never Mix Product Category WeChat with QR code, Weibo Moncler 8 Not responsive Never / Sporadic Frequent YES Mix Product Category Instagram; Weibo; Youku Ray-Ban 8 Responsive Never / Sporadic Never YES Mix Product Category WeChat; Weibo; Nice Tod's 8 Not responsive Sometimes Frequent YES Mix Product Category Facebook, Instagram, Youtube, Pinterest, G+ Bulgari 12 Responsive Frequent Never Never Mix Product Category Facebook, Twitter, Instagram, Youtube Cartier 13 Responsive Never / Sporadic Never Never Mix Product Category Youku; Weibo; WeChat with QR code Hugo Boss 14 Not responsive Sometimes Never YES Mix Product Category Weibo, Youku, WeChat with QR code Michael Kors 14 Adaptive Sometimes Never YES Category Page Weibo;WeChat; Youku Swatch 14 Responsive Never / Sporadic Never Never Mix Product Category Facebook, Twitter, Youtube, Pinterest, Instagram, G+ Zegna 17 Adaptive Sometimes Never Never Mix Product Category Facebook, Twitter, Instagram Fendi 18 Not responsive Sometimes Never YES Category Page WeChat with QR code, Weibo, Youku, Instagram Prada 18 Adaptive Sometimes Never Never Category Page Weibo, WeChat Saint Laurent 18 Not responsive Never / Sporadic Never Sometimes Mix Product Category Weibo, WeChat Shanghai Tang 18 Not responsive Never / Sporadic Never YES Mix Product Category Facebook, Twitter, Pinterest, Instagram, Youtube Bottega Veneta 22 Not responsive Sometimes Never Never Mix Product Category Facebook, Twitter, Tumblr, Instagram Dolce & Gabbana 22 Not responsive Sometimes Never Never Mix Product Category Facebook, Twitter, Intagram, Pinterest, G+ Tiffany 22 Not responsive Never / Sporadic Never Never Mix Product Category Weibo, Youku Brunello Cucinelli 25 Adaptive Never / Sporadic Never Never No product emails WeChat with QR code Coach 25 Not responsive Sometimes Never YES Home Page Facebook, Youtube, Instagram Givenchy 27 Not responsive Never / Sporadic Never Never Home Page Facebook, Instagram, Youtube, Twitter Hermès 28 Not responsive Never / Sporadic Never Never Home Page NO Céline 28 n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) Ferragamo 28 No Email Received No Email Received No Email Received No Email Received No Email Received No Email Received Loro Piana 28 n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) Ralph Lauren 28 No Email Received No Email Received No Email Received No Email Received No Email Received No Email Received Tory Burch 28 n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) n.a (welcome email only) Chow Tai Fook 28 No email option for Mainland China No email option for Mainland China No email option for Mainland China No email option for Mainland China No email option for Mainland China No email option for Mainland China

Landing on Web specific Product Responsive Frequent (above 20% of emails) Frequent (above 35% of emails) YES (Always / Frequent above 80%) Page or Mixed Product-Category Chinese bookmarks Page Sometimes (between 5% and 20% Adaptive Sometimes (below 35% of emails) Sometimes (below 80%) Landing on Category Page only western bookmarks of emails)

Never / Sporadic (below 5% of Not responsive Never Never Landing on Home Page No bookmarks emails) Source: Contactlab analysis

Figure 124: Brunello Cucinelli mobile Adaptive layout for Emails

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 80

Figure 125: Bulgari mobile Responsive layout for Emails

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 81

Figure 126: Burberry mobile Responsive layout for Emails

Source: Contactlab analysis

Figure 127: Tod’s example for differentiated emails by gender

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 82

Figure 128: Some major brands prefer to highlight only Chinese socials on Emails

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 83

Figure 129: Brunello Cucinelli offering the most options for Share. Weibo widely adopted, while WeChat only by five brands Digital Experience Axis – Share on China Websites (China, January 2017)

SHARE ON CHINA WEBSITES

WeChat Facebook Twitter Forward Brand Ranking Weibo (Moments and (currently blocked (currently Pinterest E-mail Send to friend) in China) blocked in China) Brunello Cucinelli 1 YES NO YES YES YES YES Burberry 2 YES YES NO NO NO NO Coach 2 YES YES NO NO NO NO Gucci 2 YES YES NO NO NO NO Hugo Boss 2 YES YES NO NO NO NO Michael Kors 2 YES YES NO NO NO NO Loro Piana 7 YES NO YES NO NO YES Céline 8 YES NO NO NO NO YES Chanel 8 YES NO NO NO NO YES Louis Vuitton 8 YES NO NO NO NO YES Saint Laurent 8 YES NO NO NO NO YES Armani 12 YES NO NO NO NO NO Balenciaga 12 YES NO NO NO NO NO Bottega Veneta 12 YES NO NO NO NO NO Cartier 12 YES NO NO NO NO NO Dolce & Gabbana 12 NO NO YES YES YES NO Fendi 12 YES NO NO NO NO NO Ferragamo 12 YES NO NO NO NO NO Hermès 12 YES NO NO NO NO NO Prada 12 NO NO YES YES YES NO Swatch 12 YES NO NO NO NO NO Tory Burch 12 NO NO YES YES YES NO Valentino 12 YES NO NO NO NO NO Shanghai Tang 12 YES NO NO NO NO NO Bulgari 25 NO NO YES NO YES NO Moncler 26 NO NO NO NO NO YES Tiffany 26 NO NO NO NO NO YES Dior 28 NO NO NO NO NO NO Givenchy 28 NO NO NO NO NO NO Ralph Lauren 28 NO NO NO NO NO NO Ray-Ban 28 NO NO NO NO NO NO Tod's 28 NO NO NO NO NO NO Zegna 28 NO NO NO NO NO NO Chow Tai Fook 28 NO NO NO NO NO NO

Yes Yes Yes Yes Yes Yes

No No No No No No n.a.

Source: Contactlab analysis

Figure 130: Brunello Cucinelli offering the most options for Share (although no WeChat)

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 84

Figure 131: Gucci product share on WeChat and Weibo

Source: Contactlab analysis

Figure 132: Apps for Chinese Customers: Half panel offering apps in Chinese, 10 players not offering any app Digital Customer Experience Proficiency – Apps for Chinese Customers (China, January 2017)

APPS FOR CHINESE CUSTOMERS Brand Ranking iOS Apps Android Apps Apps signalled on website Cartier 1 CN (Cartier Catalog / Cartier Fine Watchmaking / Cartier Bridal) CN (Cartier Catalog / Cartier Fine Watchmaking) YES Louis Vuitton 1 CN (Louis vuitton Pass / Louis Vuitton City Guide / 100 Legendary Trunks) CN (Louis Vuitton Pass) YES Swatch 1 CN (Swatch AR'T / Swatch & Art / The Swatch App) CN (Swatch AR'T/The Swatch App) YES Tiffany 1 CN (Tiffany & Co. Enagement Ring Finder) CN (Tiffany Enagement Ring Finder) YES Gucci 5 CN (Gucci) EN YES Valentino 5 CN (Valentino / Maison Valentino) EN YES Chanel 7 CN (Chanel Fashion) CN (Chanel Fashion) NO Dior 7 CN (DIORMAG / DiorTV) CN (DIOR MAG) NO Givenchy 7 CN (Givenchy Men & Women) NO YES Hermès 7 CN (Hermès Silk Knots) CN (Hermès Silk Knots) NO Chow Tai Fook 7 CN(CTF Membership/T Mark/CTF Game) CN(CTF Membership/T Mark) NO Prada 12 EN EN YES Tory Burch 12 EN EN YES Armani 14 CN (Emporio Armani Connected) EN NO Bulgari 14 CN (Bvlgari Vault) EN NO Fendi 14 CN (myBaguette) EN NO Michael Kors 14 CN (Michael Kors Access) EN NO Ray-Ban 14 EN NO YES Balenciaga 19 EN EN NO Hugo Boss 19 EN EN NO Moncler 19 EN EN NO Saint Laurent 19 EN EN NO Coach 23 EN NO NO Loro Piana 23 EN NO NO Bottega Veneta 25 NO NO n.a. Brunello Cucinelli 25 NO NO n.a. Burberry 25 NO NO n.a. Céline 25 NO NO n.a. Dolce & Gabbana 25 NO NO n.a. Ferragamo 25 NO NO n.a. Ralph Lauren 25 NO NO n.a. Tod's 25 NO NO n.a. Zegna 25 NO NO n.a. Shanghai Tang 25 NO NO n.a.

Signalled on Chinese/Intl. Offered in Chinese Offered in Chinese website Offered in English Offered in English Not offered Not offered Not signalled on website

n.a. Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 85

Figure 133: Example Swatch AR’T app signalled on China website (iOS and Android)

Source: Contactlab analysis

E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 86

About the collaboration with Contactlab Exane has worked in collaboration with Contactlab on this report and the sections provided by Contactlab are clearly highlighted. The contributors from Contactlab are Marco Pozzi, Francesca Borgonovo, Xian Zhang and Kuiling Song. Contributors from Contactlab are not Research analysts and are not FCA or AMF registered. They have only shared their expertise on clearly delineated sections of the report and did not have access to the full report or its conclusions prior to publication.

Contactlab presentation Contactlab provides the leading engagement marketing platform for commerce-focused companies and fashion & luxury brands to develop successfully digital communication programs that enable personalized marketing to unlock demand and build lasting customer preferences. Founded in 1998, Contactlab is led by its founder Massimo Fubini, an internet industry veteran and opinion leader in the marketing field since 1995. Thanks to our own enabling PaaS technology and to the experience of our navigated professionals, we enable brands to achieve a deeper understanding of customers, to deliver uniquely relevant messages at every touchpoint of the customer journey and to measure performances with real-time dashboards that display all the relevant data. Our enterprise-grade platform is built with the highest security level, reliability, management, scalability. Our solutions enable brands to gain insights into the context of each customer and deepen the retail experience by delivering highly individualized digital contact plans across channels based on events, preferences and product lifecycle. Today, we work with more than 1000 clients in different industries across the world and serve most of the world-class brands in the Luxury and Fashion sectors

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E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 87

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E xane BNP Paribas Research & Contactlab Luxury Goods 21 FEBRUARY 2017 page 88

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