Swiss watchmaker Tag Heuer has launched a flagship store on Tmall.com, becoming the fifth brand owned by luxury goods giant LVMH to set up shop on Alibaba Group’s market-leading China shopping website.
The Tag Heuer launch on Tmall is the latest sign of luxury goods makers, faced with slower sales in the once-hot China market, embracing new sales channels and digital marketing in an attempt to reach the country’s internet savvy younger generation.
Leo Poon, Tag Heuer’s general manager for Greater China, called the move “a right decision, since Tmall is the largest B2C platform in China and can help us to reach our target customers.” More than 75 percent of Alibaba users are 35 years old or younger. The company’s China retail marketplaces had a total of 443 million annual active buyers as of Dec. 31.
China’s share of the global luxury goods market declined slightly from 31 percent to 30 percent in 2016, according to a recent report released by consulting firm Bain. But the country remains an engine of growth for luxury goods as China’s middle class continues to increase in size and purchasing power. Tighter government controls on “grey market” imports are bolstering domestic consumption through legitimate sales channels; meanwhile, online shopping in China grew a brisk 26 percent last year, according to China’s National Bureau of Statistics.
Against this backdrop, luxury good makers are targeting a younger demographic through digital sales and marketing strategies. “If you want to win the future, you should establish a relationship with the young generation early,” said Liu Xiuyun, general manager of Tmall’s apparel division. “Confronted with the internet and e-commerce, conservative luxury brands will lose the future in China.”
Tmall is not only a sales channel, Liu added. Because it is part of Alibaba’s online ecosystem, which includes mobile apps, social media and entertainment portals, merchants can engage consumers where they live online. Alibaba also has a wealth of data allowing merchants to more precisely target and cultivate individual customers as well as predict general consumption trends, “and this is exactly what luxury brands are looking for,” Liu said.
In addition to Tag Heuer, other LVMH flagship stores on Tmall are cosmetics brands Make Up For Ever and Guerlain, beauty brands retailer SEPHORA and premium luggage brand Rimowa.
LVMH’s venerable Luis Vuitton label has also partnered with Alibaba. Last year, Luis Vuitton invited members of Alibaba’s exclusive APASS club—online shoppers who spend an average of $45,000 a year in Alibaba marketplaces—to visit the company’s headquarters in France. In addition, Luis Vuitton became one of the first international brands to join Alibaba’s recently launched Big Data Anti-Counterfeiting Alliance, an organization set up to share industry and technical know-how in order to combat the online sale of counterfeit goods.
At a Feb. 13 ceremony marking the opening of their Tmall store, Tag Heuer unveiled a pair of his-and-her watches, priced at $7,852 for both, as a special Valentine’s Day promotion in China. The launch ceremony, broadcast via Tmall’s mobile app, featured a livestream of Chinese actress Song Jia.