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Which Brands Resonated Most in China This Fashion Month?
This season, labels relied on a variety of tactics to activate the world’s largest luxury market.
LONDON, United Kingdom — When it comes to fashion month, luxury brands’ marketing strategies for China have always relied on front-row faces. “To Chinese consumers, fashion week equals celebrities,” Maggie Mao, deputy executive editor-in-chief and fashion director at Grazia China told BoF exactly one year ago.
This season, however, brands had to make do without the physical presences of A-list heartthrobs and selfie-stick-wielding KOLs. Some names, like Prada, chose to forego the front row altogether by launching filmed runway shows sans audience. Others, like Burberry, worked with influencers to launch a livestream ahead of the Spring/Summer 2021 show.
“Of course, putting on shows in Europe without Chinese attendants does make it less of an event for the local market,” said Bohan Qiu, founder of Shanghai-based PR agency Boh Project. “I do think Chinese customers [still] care about fashion weeks in Europe, but not as much as before.”
This should give luxury executives pause for thought. Chinese wallets have never been as vital for luxury fashion brands as they are now. While spending in the US and Europe remains lethargic, the mainland’s retail sales rose for the first time this year in August, according to data published by the National Bureau of Statistics, further cementing China’s lead on the road to recovery from Covid-19.
Finding an effective alternative or supplementary marketing strategy for China should be an urgent priority for most brands. Yet luxury executives are still experimenting and exploring their options as health guidelines change; whether these new formats become more than temporary stand-ins for jet-setting crusades remains to be seen. But they do hint at a new breed of tactics aimed at engaging audiences in China — tactics that could inform the way the sector’s giants target the world’s biggest luxury market for years to come.
Who Watched What
According to data gathered by Shanghai-based KOL management and analytics firm Parklu across 10 Chinese social media platforms including Weibo, WeChat and Douyin, Prada made a big splash in China, generating over 48 million yuan (around $7 million) in earned media value (EMV) within two days of its show on September 24. The brand was mentioned by 175 Chinese influencers and content relating to Raf Simon's co-creative debut drew over 442,300 views and 486 million impressions over the two-day period.
Prada revealed that its livestreamed show and invite-only viewing event at Rongzhai, the brand’s residence and cultural space in Shanghai, generated 48 million views on Weibo and Douyin; the show’s hashtag hit 170 million views in a day.
“Our aim was to be both global and local interacting with a more intimate approach when needed,” said the group’s Head of Marketing and Communications Lorenzo Bertelli in a press release.
“Prada generated the biggest buzz, for sure," said Sophie Jiang, chief executive of PR firm E&A, which also has offices in mainland China and Hong Kong. "The Rongzhai gathering felt emotional and important. A lot of people in media flew from Beijing to Shanghai to take part in the event and afterparty."
Meanwhile, Valentino, Dior and Burberry generated over 28 million, 18 million and 17 million in EMV respectively, according to Parklu.
Alongside Prada, Chanel's content around its October 6 show also reached an extensive digital audience. The brand's livestream on Weibo drew a whopping 10 million views in one day; the bulk of top comments were by fans of brand ambassadors Victoria Song, William Chan and Wang Yibo, who were keen to support their idols. Views of the brand’s hashtag on Weibo, filled mostly with celebrities and fan accounts promoting the livestream, hit a staggering 430 million views as of October 8. Louis Vuitton's hashtag, by comparison, accumulated around 18 million within the same period.
For some Chinese fashion industry insiders, what stood out were new, experimental digital formats — Qiu found Balenciaga’s music video, released in lieu of a live show, refreshing alongside other brands returning to large runway formats.
“The Balenciaga one made a real ripple,” Qiu said. “I think the Kering camp... tried to innovate from the traditional fashion show, which feels outdated considering not everyone can go there.”
For E&A's Jiang, Moschino's short film featuring a shrunken-down collection and marionette versions of models and industry leaders made a big impression. "It was smart of them, as it encouraged [editors like Angelica Cheung, who featured in the clip] to repost their content," she said.
Drawing 21,000 views in three days and 5,785 views in 12 days respectively on Weibo, Balenciaga and Moschino’s videos didn't gain nearly as much traction as Prada or Chanel’s livestreams. But loyal fans of the brand still tuned in and sang their praises. “Every look is on point for me,” user @Vagraint commented.
Live and Localised
“Fashion shows, the way they’ve been presented to the market [in the past], haven’t been the most engaging or interesting,” said Iris Chan, a partner overseeing international client development at Digital Luxury Group. “The pandemic has forced brands to rethink how they do things. Everyone has to be a bit smarter about every dollar they’re spending.”
Beyond brands inviting influencers and industry insiders to watch shows from the comfort of their homes, Chan noticed a surge in brands either hosting offline viewing events or encouraging influencers to do so within their own social circles. Fendi opted for the latter by sending out invites globally enclosed with a box of logo-branded pasta, having the likes of Hong Kong-based socialite Feiping Chang host private dinner parties to ring in the new collection.
Valentino invited celebrities like house ambassador Lay Zhang to a star-studded live viewing party. A Weibo video post by Marie Claire China of Zhang telling fans to tune in to the livestream has since garnered almost 144,000 likes.
Some brands chose a slightly different route. Loewe, whose 'show in a box' method returned for a second season and riffed on the 'at home' theme. The brand partnered with KOLs like Mia Kong and Licheng Ling to unpack posters to create still lifes and on-brand sets for their social media posts.
"Loewe did a really great job," said Shanghai-based Creative Director Erica Zhu. "Its 'show on the wall' format got the brand concept across in a creative way."
Localised activations are especially valuable in the mainland: The West’s livestreaming formats are still nascent and passive compared to the hyper-interactive livestream experiences in China, a market that became well-acquainted with the medium years ago and one that supports its own unique ecosystem of livestreaming platforms.
“Having those voices help narrate or help comment from a Chinese perspective for the Chinese audience really brings to life the front row experience,” said Chan, who sees this season's moves as baby steps in the right direction. “There’s just that much more room to do something with the Chinese consumer that already has the appetite for livestreams.”
The shift is also a cultural one. Brands need to adapt their marketing strategies as Asia’s luxury spending power increasingly overtakes that of the West.
“[A single] overarching global message no longer speaks to Asian audiences,” said Qiu. “Brands today can’t just rely on an Anglo-Saxon voice… which customers here find hard to relate to.”
Re-Show 2.0
Alongside activating fashion week events in China, brands like Louis Vuitton have already gone the extra mile by reshowing collections in the mainland (the likes of Dior have done the same in Japan). Following Louis Vuitton's menswear show in Shanghai, the brand announced that stores in mainland China, Taiwan and South Korea marked record sales weekends. The brand's latest offering's performance pales in comparison to the August show — the latter's hashtag has since been viewed 1.57 billion times on Weibo.
The re-show approach is nothing new — Fendi staged a catwalk show on the Great Wall of China as early as 2007 — but it bears more potential than ever while international travel is not an option. Bringing novel experiences to Chinese tastemakers and customers is still something that many brands haven’t tackled head-on, according to Chan.
Qiu attributed the commercial success of Louis Vuitton’s menswear show to the fact that many of the brand’s VIP customers, “the ones who should look at the collections first-hand,” were in attendance. “Combining what you want to show to the industry with what you want to show to customers is what a lot of fashion houses are struggling [with].”
Looking ahead, brands will have to reach their China targets while keeping a close eye on costs, which can add up fast in the country’s ‘pay to play’ media environment. Rather than tapping the hottest celebrities of the moment, adopting a ‘pyramid’ KOL strategy — carefully building relationships with a few on-brand A-listers while working with a larger number of hand-picked KOLs and micro-influencers — will be the new modus operandi, said Chan.
For players like Prada that have real estate in the mainland, localised gatherings are cost-efficient; sustainability perks are also worth noting, considering the financial and environmental cost of flying influencers, press and buyers into far-flung locations across the globe.
Ultimately, this season’s experiments have laid the groundwork for brands to get creative and experiment further with storytelling through China’s digital and omnichannel landscape.
“What Louis Vuitton did on the West Bund, that wasn’t a massive show in terms of what could be massive in China,” said Chan. “The old fashion week model is something that brands will continue to come in and out of, [but] it doesn’t mean a brand is stuck with that.”
Chanel Buys Majority Stakes in Italian Shoemaker Ballin, Tannery Gaiera
Chanel continues to bolster its supply chain by acquiring companies too small to weather the fallout of the COVID-19 pandemic by themselves.
PARIS – Chanel continues to bolster its network of suppliers with the acquisition of majority stakes in Italian luxury shoe maker Ballin and tannery Conceria Gaiera Giovanni.
The French luxury house has been snapping up partner companies as the fallout from the coronavirus pandemic threatens many smaller companies in the luxury supply chain.
“Chanel is a long-term client of both companies, and this decision was motivated by converging interests: their need to team up with a solid partner capable of ensuring long-term visibility, and a desire for Chanel to support sectors essential to its business and to the luxury sector in general,” Chanel said of the two recent acquisitions.
Ballin, located around 20 miles from Venice, was founded in 1945 and employs 200 people, with an annual production capacity of more than 250,000 pairs of shoes, according to its website.
Founded in 1946, Conceria Gaiera Giovanni is located near Milan and specializes in producing goat, lamb and calf leathers. It has been working with fashion brands since the Nineties and has recently upped its sustainability efforts, with the introduction of a metal-free lambskin in 2018.
As is the case for the other companies in Chanel’s Paraffection division, which also houses specialty workshops like embroiderer Lesage and feather maker Lemarié, the companies will continue to work with external customers.
In July, Chanel said it had acquired the creation, development and manufacturing branch of the yarn company Vimar 1991, which provides the thread for many of its signature tweed fabrics.
Second lockdown would hit companies ‘harder’, warns Henkel chief
Persil-maker reports strong pandemic sales but warns momentum will slow as demand eases
The chief executive of Henkel, the maker of Persil washing powder and Loctite glue, is urging policymakers to avoid a full-scale second lockdown in a plea to limit economic damage from the fight against coronavirus.
“Many companies were able to cushion the fallout from the first lockdown, but they would be hit harder by a second one,” Carsten Knobel told the Financial Times on Friday, after the group pre-released better than expected results for the third quarter as well as a cautiously optimistic outlook for the full year.
The company warned that momentum would slow in the fourth quarter as demand diminished.
Shares in family-controlled Henkel, which is valued at €38bn on the German stock market, rose up to 2.8 per cent in early trading on Friday.
The popularity of new products such as environmentally friendly washing powder and pent-up demand after lockdowns ended earlier this year led to a 3.9 per cent year-on-year rise in organic sales in the third quarter. All three business units — adhesives, hair and beauty as well as laundry and homecare — reported rising revenue.
As long as a second lockdown could be avoided, Henkel said its full-year performance would be better than analyst expectations. The company now expects a drop in revenue of between 1 and 2 per cent, compared with a 3.6 per cent forecast by analysts polled by Vara Research.
The operating profit margin, which stood at 16 per cent in 2019, is expected to drop to 13 to 13.5 per cent. “Compared to our expectations at the onset of the pandemic half a year ago, we are doing better so far,” Mr Knobel told the FT. Over the first nine months, sales were down 2.1 per cent year on year. He would not be drawn on expectations for the coming year.
Mr Knobel praised the German government for “doing a good job” in fighting the pandemic. Looking forward, he said that the country needed strategies different to heavy restrictions on economic life that were imposed in March to contain the pandemic.
In Germany, the number of new infections per day has risen to above 4,000, the highest level since April.
Mr Knobel has been in charge of Henkel since the start of this year after his predecessor Hans van Bylen left the company following a series of revenue and profit warnings last year.
Shortly after taking on the job, the new chief promised to “rigorously optimise and shape” the brands that Henkel owned and announced plans to sell or close down underperforming businesses accounting for €500m in revenue by 2021. He has also earmarked operations generating a further €500m in revenue for restructuring.
“Henkel is doing the right things for the business and — coincidentally or not — is seeing positive results,” wrote James Edwardes Jones, an analyst at RBC Capital Markets, in a note to clients.
The German Car Industry Musters for a New Tech Battle
VW and Daimler want to develop their own software operating systems, even as the rest of the auto industry embraces Google
Is the heart of your car a screen?
Having spent years—and tens of billions of dollars—preparing for a shift in production toward electric vehicles, German car makers are expressing a new angst: that digitally “connected cars” could prove even more disruptive to their traditional strengths. This second leg of their race against Tesla could become a fresh excuse to squander investors’ capital.
Daimler set two priorities for technological leadership in a new strategy for its Mercedes-Benz DMLRY -0.55% brand this week: electric drive and car software. For the latter, the company is working on an entire operating system, MB.OS, that from 2024 will run not just Mercedes’s proprietary infotainment system and its mobile broadband connection but also crucial elements of the driving experience, including self-driving features and battery management.
The company will partner with technology specialists for specific applications, notably Nvidia for automated driving. Yet the closer the software gets to the customer experience, the more Daimler wants to do in-house. The interface with the driver in particular “is not something that we would like to outsource to somebody else,” said Chief Executive Ola Källenius.
Volkswagen VOW 0.20% is on a similar road. At last week’s annual general meeting, Chief Executive Herbert Diess said replacing engines with electric batteries and motors would be simple to manage compared with the transformation of the car into a “fully networked mobility device.” He is tackling the challenge by investing heavily in coding: VW wants to increase the proportion of software written in-house to at least 60%, from 10% currently, at a cost of €7 billion, equivalent to $8.23 billion, by 2025.
The shadow haunting the German automotive industry is, of course, Tesla. Mr. Diess regularly spurs on his managers by invoking the U.S. company’s technological lead and astronomical market value. The starring role accorded to the infotainment screen in a Tesla seems to be a popular feature with the kind of tech-loving consumers who might otherwise buy an Audi. Auto makers are also envious of Tesla’s capacity to keep consumers’ systems fresh via “over-the-air” updates.
One reason Daimler cited for focusing on software was the scope for using this kind of live digital connection with its customers to sell them services well after they have bought their Mercedes-Benz. Many manufacturers have talked of this potential, but Daimler was bold enough to pin a number on it: It hopes to make €1 billion in operating profit from digital services by 2025.
The software industry has been through a wrenching transition over the past decade from selling one-off packages to subscriptions for access to a constantly updated, cloud-hosted service. As more vehicles are connected to the internet, infotainment systems are likely next in line. One big unknown is what consumers will be prepared to pay for, and who will get it—vehicle manufacturers or software developers. Another is how deeply the infotainment system will end up being linked to driving controls.
For now, though, most car makers are more relaxed than Daimler and VW about ceding control of at least infotainment to the tech industry. General Motors, Volvo Cars, the Renault-Nissan-Mitsubishi alliance and Peugeot (which Fiat-Chrysler will likely follow) all are partnering to varying extents with Alphabet’s Google, which has developed a vehicle version of its smartphone operating system called Android Automotive.
“Our customers spend about one hour a day in their car and one hour a day away from their phone. Any car maker who tries to create an ecosystem around the car deserves to lose the customer,” says Martin Kristensson, head of digital business at Volvo Cars.
Volvo and others say partnering with Google makes sense because consumers already use and like its products. The glitchy reputation of auto makers’ existing vehicle infotainment systems adds weight to this argument. But partnering also is probably the cheaper option.
“There are a lot of economies of scale in software development. Auto makers who want to get more programmers and do the work themselves are generally underestimating the costs,” says Mark Wakefield, co-leader of the automotive and industrial practice at AlixPartners.
The insistence of Daimler and VW on building up software skills might therefore be another iteration of their historic bias toward over-investment. The vast expense of electric-vehicle development has forced both companies to get more serious about cutting fixed costs in recent years; Mercedes-Benz this week committed to a 20% reduction by 2025. Ominously, though, the company also is charging into yet another technological battleground.
Drivers and investors alike may end up preferring auto makers to focus on what they are best at: assembling cars.
How Hermès and Jasper Morrison Made a Minimalist’s Dream Chair
In partnership with Hermès Maison, Jasper Morrison has revisited one of his past designs, creating contemplative furniture for complicated times.
SURE WOOD The Équilibre d’Hermès dining table, designed by Jasper Morrison in partnership with Hermès Maison’s co–artistic directors, Charlotte Macaux Perelman and Alexis Fabry. $22,500, hermes.com
PHOTO: ROMAIN LAPRADE FOR WSJ. MAGAZINE
Designer Jasper Morrison rarely has the chance to reconsider an object or a piece of furniture once his client signs off on it. This month, though, an artfully simple chair he came up with 23 years ago gets a second life thanks to Hermès, which invited the British industrial designer to expand on his work and add two companion pieces. Équilibre d’Hermès, as the new grouping is called, has been two years in the making, but its backstory feels of the moment, in tune somehow with the ponderous, pent-up fall of 2020.
Morrison was in his late 30s and living in London when he was contacted by the monastery of Sainte-Marie de La Tourette, a community of Dominican monks living in hilltop seclusion near Lyon, France. The brothers needed dining chairs for their refectory. Could Morrison help? He was already up to speed on the building: La Tourette is a modernist masterwork, designed by Le Corbusier in 1953 and completed in 1960. A fortress in cast concrete and glittering colored glass, it speaks of solitude, reflection, humility and, above all, containment—even at mealtimes.
SITTING PRETTY The Équilibre d’Hermès dining chair, $8,350, and armchair, $7,100, hermes.com
PHOTO: ROMAIN LAPRADE FOR WSJ. MAGAZINE
There was one hurdle to the commission, Morrison discovered. It would be a competition, and he was up against Vico Magistretti, a lion of postwar Italian design, and the Pritzker Prize–winning Portuguese architect Álvaro Siza. “I didn’t really think I had a hope in hell, because they were overwhelmingly senior to me,” he recalls. But he wanted to see the monastery. “I love the way the French kind of did modernism so much more poetically than anybody else,” he says.
Morrison spent a day and a night at La Tourette, taking in the atmosphere and being wined and dined by a few brothers at a restaurant down the hill. “We drank a lot, we ate a lot,” he remembers. “We ended up drinking five different cognacs in some sort of altitude test—could you taste the difference given the high elevation, that sort of thing.” Later, as they repaired to the chapel for some music, Morrison looked down at the wooden pews and their sled-style runners, which extended past the back legs and prevented them from tipping over. “The benches seemed to be kneeling,” he says. “And that’s where I started with the design. Maybe the brothers are well enough behaved not to fall off the back.”
Morrison’s sturdy wood chair with sled-style feet won the competition. (“It turned out I was the only one who actually went to the monastery,” he says.) Conventional in some ways, it was exceptional in others—for one thing, there were almost no right angles. When seen from the side, the legs form a trapezoid that is slightly wider at the seat and narrower where it meets the floor, putting all the emphasis on the runners. A French woodworker made just 120 of them—Morrison didn’t even get one—and they are still in use at the monastery.
Despite being out of the public eye, the La Tourette chair gained a following over the years. Among its fans were Charlotte Macaux Perelman and Alexis Fabry, the co–artistic directors of Hermès Maison. In 2018, they approached Morrison about designing a new chair for the brand that would express a similar simplicity and rigor. Morrison agreed, suggesting a re-edit of the chair itself. “Jasper said that he really liked the project, but it was like a prototype,” Perelman explains. “It represented about 100 chairs in his mind.” Per Fabry, one sticking point was the seat’s ergonomics. “The Dominican friar who would sit on the chair doesn’t have the same expectations as you and me!” he says.
Morrison made multiple improvements to La Tourette, refining the detailing and improving its overall ease, which meant replacing the slatted seat and back with oak elegantly routed out, like lines of script in a notebook, to lighten its character. Once the new language had been established, he developed a matching dining table and an armchair with a leather seat pad, in a nod to the chair’s new patrimony.
Though Morrison isn’t one to look to the heavens for inspiration—“I don’t think any idea of mine has ever come that way, from the clouds,” he says—he allows that the design of La Tourette has reached its natural conclusion: “There’s a crossbar that funnily enough forms a kind of H.”
Gapping down
In reaction to disappointing earnings/guidance:
- MODN -0.9% (guides above consensus for SepQ; also new CFO)
M&A news:
- AMD -3.7% (on reports that AMD is in advanced talks to buy rival chip maker Xilinx)
Other news:
- NTCO -4.2% (priced a global offering of the total 121,400,000 common shares for approximately R$5.6 billion at a public offering price of R$46.25 per share or US$16.4591 per ADS)
- SRNE -0.5% (stock offering)
Analyst comments:
- ASAN -1.9% (initiated with Underperform at Bernstein)
- AMGN -0.6% (multiple analyst downgrades)
- NVDA -0.3% (downgraded to Sell from Neutral at New Street; tgt $400)
Gapping up
In reaction to earnings/guidance:
- EXTR +18.2% (raises Q1 EPS and revenue guidance above consensus)
- GNMK +13.3% (guides Q3 revs above consensus; also announces it has received EUA from the FDA for ePlex)
- MATX +7.8% (issues upside Q3 EPS guidance)
- HCA +6.2% (guides Q3 revs above consensus; will return or repay early $6 bln of govt assistance from CARES Act)
- NXPI +5.1% (raises Q3 rev guidance above consensus)
M&A news:
- XLNX +16.4% (on reports that AMD is in advanced talks to buy rival chip maker Xilinx)
- MXIM +1.5% / ADI +1% (shareholders vote to approve ADI/MXIM merger; also in sympathy with strong NXPI guidance)
Select metals/mining stocks trading higher:
- HMY +3.7%, GFI +3.4%, AU +3.4%, GDX +2.2%, KGC +1.9%, GOLD +1.7%, FCX +1.7%, AUY +1.5%, NEM +1.4%, NG +1.4%, GLD +1.2%
Select cannabis related names showing strength:
- TLRY +9.8%, ACB +8.4%, MJ +4.2%, APHA +3.2%, CGC +2.8%
Other news:
- MVIS +29% (attributed to positive blog mention)
- PGEN +8.8% (Precigen announces Merck KGaA increases ownership position through exercise of convertible note)
- SELB +9.3% (enters into a research agreement with IGAN Biosciences)
- AXGT +4.9% (received Rare Pediatric Disease Designation from the FDA for AXO-AAV-GM1 )
- HL +3.8% (reports Q3 production; reaffirms increased annual silver and gold production guidance)
- VLDR +2.7% (the co and and RoboSense announced that the two companies have entered a long-term global cross-licensing relationship encompassing a broad range of 360 surround-view lidar sensors)
- VERI +2.4% (new CFO)
- GILD +2.1% (final results of NIAID ACTT-1 trial published in NEJM)
- MCHP +1.6% / SWKS +0.5% (in sympathy with strong NXPI guidance)
- CCL +1.4% (CEO on CNBC: Says a vaccine would be helpful, but just one tool in the toolbox)
- ET +1.4% (names new co-CEOs)
- EXEL +0.8% (disclosed new preclinical data showing that AUR102 has potent anti-tumor activity in a large panel of cancer cell lines)
- GRFS +0.6% (Grifols, S.A.'s anti-SARS-CoV-2 hyperimmune globulin begins clinical trial in patients with COVID-19)
- AMZN +0.5% (confirms Prime Pay will start October 13 in 19 countries worldwide)
- AAPL +0.3% (to extend Apple TV+ free trials for three months, according to CNBC; iPhone 12 details have been leaked ahead of event on Tuesday)
Analyst comments:
- RKT +6.2% (upgraded to Overweight from Neutral at JPMorgan)
- LILA +5.6% (upgraded to Overweight at Morgan Stanley)
- GE +4.2% (reinstated with Buy at Goldman)
- W +2.2% (upgraded to Outperform from Market Perform at William Blair)
- BIG +1.5% (initiated with an Outperform at Wolfe Research; tgt $61)
- IP +1.4% (upgraded to Overweight from Equal Weight at Wells Fargo)
- RNG +1.4% (initiated with a Buy at Mizuho)
- ZM +1.1% (initiated with a Buy at Mizuho)
- ROKU +1.1% ( target raised to $255 at Needham on installed base acceleration)
- DAR +0.9% (initiated with a Buy at Tudor Pickering)
- MDT +0.6% (upgraded to Outperform from Market Perform at Bernstein)
Early premarket gappers
- Gapping up: MVIS +33.9%, EXTR +20%, XLNX +17%, SELB +12.4%, GNMK +9.9%, ACB +9.4%, TLRY +8.5%, MATX +7.8%, HCA +7.7%, NXPI +5.1%, MJ +4.2%, LILA +4.1%, VLDR +3.6%, APHA +3.2%, HL +3.1%, RKT +2.5%, VERI +2.4%, GE +2.3%, W +2%, GILD +1.6%, MCHP +1.6%, MXIM +1.5%, TSLA +1.5%, FCX +1.4%, CCL +1.3%, ON +1.2%, ALK +1.2%, IP +1.2%, DAR +1.1%, ADI +1%,
- Gapping down: AMD -3.7%, STLD -1.5%, ASAN -1.2%, MODN -0.9%,