Luxury brands are taking the online-to-offline experience to the next level for Chinese consumers during this year’s 11.11 Global Shopping Festival who expect frictionless, hyper-personalized and instant gratification from their shopping experiences, said Alibaba Group’s luxury division chief Janet Wang.
These trends were set in motion long before the coronavirus pandemic, but they gained traction as more consumers turned to digital platforms when social-distancing rules were in force.
“Consumers no longer think in terms of a break between physical and digital. They want a consistent, unified experience from brands, whether they are shopping online or offline,” said Wang, who heads up Alibaba’s flagship luxury platform, Tmall Luxury Pavilion, for designer brands.
Wang – an Alibaba veteran and formerly the head of retail juggernaut Zara’s online business for the Asia Pacific – set up Tmall’s international business development team in 2010 to help global brands broaden their presence in China. In a few short years, the platform grew to include blue-chip names from Nike to Burberry.
Wang’s observations on e-commerce jibe with industry reports on structural changes in retail. Management consultancy Bain & Co. expects China to become the planet’s biggest luxury market by 2025, as more Chinese shop at home than travel overseas.
While the majority of luxury shopping still takes place in physical retail stores, online and omnichannel expansion has steadily increased – China’s luxury online penetration surged to 23% in 2020, up from 12% the previous year, the consultancy said.
“Consumers are consuming physical goods but now also consuming virtual experiences and services. So, how to digitalize all these components and make them available to consumers is something that we’re doing very actively now,” said Wang, who rejoined Alibaba in February.
To keep pace with changes in consumer behavior, luxury companies are expanding their digital capabilities and New Retail strategies beyond sales and marketing.
Brands including Gucci, Vacheron Constantin and Maison Margiela recently partnered with Tmall Luxury Pavilion to expand services traditionally offered in physical stores, such as membership privileges, consultation with sales associates and after-sales services.
Judy Chang, vice president of marketing for the Greater China region at Coach, said these services save their customers extra trips to physical stores.
“What really sets Tmall Luxury Pavilion apart from other platforms is its capability to go beyond only selling products and providing information. It offers the complete brand experience,” said Chang.
New Retail Elevates 11.11
More than 200 luxury brands are taking part in this year’s 11.11 Global Shopping Festival, the world’s largest retail extravaganza by sales, with an array of services at shoppers’ fingertips from bespoke engraving to cleaning and repair services.
“11.11 is one of the most important opportunities for the brands to reach out to a broader Chinese consumer base,” Wang told Alizila in an exclusive interview in Hangzhou, Alibaba’s headquarters. “This year, we wanted to take a step forward and help brands upgrade their omnichannel experiences.”
Earlier this month, the platform rolled out its first-ever digital art gallery in the metaverse, collaborating with brands such as Burberry, Balmain, Longines, Coach, La Perla and Emporio Armani. Virtual influencer Ling will present a collection of digital artworks given to consumers with select purchases during 11.11.
Starting next week, Swiss watchmaker Chopard will tap the Pavilion’s 3D shopping feature to create a virtual store mirroring one of its brick-and-mortar boutiques, as well as a pop-up tool to livestream a jewelry and watch show hosted by its flagship store. Cartier has also taken to 3D technology, using the feature for detailed product viewing online.
“Consumers today aren’t satisfied with just two-dimensional images and texts,” Wang explained. “They want to use 3D technology to see the product’s details and texture from different angles, use AR to try on watches, jewelry and shoes. These experiences help close the distance between luxury brands and the consumer.”
Panerai and Bally‘s top executives will join the brand’s livestreams to directly engage Chinese consumers, while brands including IWC Schaffhausen and Maison Margiela are inviting shoppers to virtually try on their products during the festival using augmented-reality technology
On China’s push for “common prosperity” to address a wealth gap in the country, Wang said that the campaign would ultimately help lift Chinese consumers’ income levels and accelerate the growth of the country’s emerging middle-class population.
She also pointed to the rise of the Chinese island province Hainan as a duty-free paradise – another interesting trend that’s taken shape in the industry. Chinese shoppers have turned up in droves to the “Hawaii of China,” where duty-free sales surged 257% year on year from January to June.
But at the same time, consumers also increasingly appreciate the ability to access a brand’s new products anytime and anywhere they may be.
“They want what they desire right away, and they want personalization,” said Wang, adding that is what platforms like Tmall Luxury Pavilion offer.
Local Luxury in Spotlight
Wang also pointed the rise of homegrown designer brands and Chinese culture gaining sway among consumers as important trends in luxury.
China’s local holidays – such as the Chinese New Year and Qixi Festival – have seen the fastest sales growth for local brands compared with other shopping campaigns, said Wang, who attributes the traditional festivals’ popularity to more young people taking pride in their cultural heritage.
A swelling cohort of Chinese consumers are mix and matching pieces from emerging local designers with items from big-name brands. This has led to collaborations like the recent crossover between luxury watchmaker IWC Schaffhausen and Chinese womenswear label Comme Moi, who will livestream their fashion show during 11.11.
“Chinese consumers are becoming more and more sophisticated, and their tastes are becoming more diverse. It’s been exciting to see more ‘East-meets-West’ creative collaborations taking place on our platform. This is a trend we look forward to seeing unfold.”
To receive the latest news directly in your inbox, sign up for the weekly Alizila newsletter