The rise of multi-label and lifestyle brands in China

Image courtesy of mckynsey.com

In Beijing, it seems that everyone is opening up a vintage shop. From the American, retro-cowboy, rockabilly vintage of the shops in Gulou, to the more European vintage of Sanlitun’s House of Willow, there are so many different vintage boutiques that have mushroomed around the city. Vintage is still a niche market in general. It still has a concentrated appeal—it’s not for everyone. These shops complement their brick-and-mortar shops with E-commerce platforms that serve more for marketing purposes than actual sales. These WeChat platform are more like style blogs where everything it’s about lifestyle.

Beijing's pioneer vintage shop: Mega Mega Vintage

Beijing’s pioneer vintage shop: Mega Mega Vintage

Mainstream luxury vs niche luxury

Consumption in China is becoming more and more driven by genuine demand. Until recently, products that have been arousing interest among local consumers were those in the high-end brand segment. But now, their buying interests are clearly turning towards the items that they use in everyday life. This trend has been noticed by retail players, that started developing their products and services into interconnected systems with different complementary services and brands. Back when Louis Vuitton and Chanel entered the Chinese market, they catered a huge focus. As a consequence, so much imitation came out on the streets that nowadays you don’t know what’s real and what is not. That’s where the appeal of niche luxury came in. Because it’s one of a kind, or there are very few pieces in circulation, there’s no imitation and less chance of clashing with somebody who has the same bag.

Currently, with most younger Chinese still in something of a “honeymoon” period in regards to imported luxury and fashion, vintage or vintage-inspired fashion will likely remain a niche populated mostly by the avant-garde for the time being. However, this testifies how the consumer market is now undergoing tremendous restructuring, as Chinese middle class gain more purchasing power. A portion of these strong consumers has started to pursue individualistic and distinctive labels, with their interest gradually shifting from popular mainstream luxury brands to those that express unique personalities.

Alter, Shanghai. Image courtesy of neocha.com

Alter, Shanghai. Image courtesy of neocha.com

This trend has led multi-brand stores to rapidly crop up in China

After I moved to Shanghai for work, I have been eating a lot of bagels. In fact, one of the favorite lunch spots of me and my colleagues is this recently opened bagel restaurant called Spread The Bagel, in Xintiandi. Apart from the amazing bagels, the location turned out to be quite interesting itself. The founder is in fact renting a portion of the retail space of Alter, a Chinese multi-brand store that imports a bunch of niche brands from Europe.

According to a report by RET, multi-brand stores in China experienced an extended phase of slow growth from 1996—when the first store opened in Shanghai—to 2009. In 2010, multi-brand stores entered a phase of furious growth and have been gradually expanding to the second- and third-tier cities. The number of new multi-brand stores opened between 2010 and 2013 is four times the sum of the past 14 years. Homegrown multi-brand stores now account for 55.6 percent of all multi-brand stores. Different from foreign-invested stores, which operate as large corporations, homegrown stores are primarily small-scale and independent ones that are geographically concentrated in Beijing, Shanghai, Guangzhou, Hangzhou, and Hong Kong. Presently, there are a total of 183 locations, covering 829 luxury brands. Some of the homegrown stores have begun chain expansion and to seek a presence in second- and third-tier cities. Two-thirds of the homegrown multi-brand stores have established an e-commerce platform. With lower operating cost and increased visibility as O2O’s main advantages, some of the leading stores in Beijing and Shanghai have been using WeChat for customer service and sales. Online sales reportedly account for 10 percent of total sales. Most multi-brand stores carry trendy, edgy products and fall on the mid- to low-priced sides, as their main consumer groups are usually younger and more expressive.

Dior exhibition in Shanghai, 2014. Image courtesy of haberdasherstandard.com

Dior exhibition in Shanghai, 2014. Image courtesy of haberdasherstandard.com

Art and brands are increasingly finding ways to collaborate

The line between luxury and art is blurring across the world, but it’s doing so especially quickly in China, where it’s getting more and more difficult to draw a clear line between the commercial realm and the community space. I already talked on how smart shopping malls in China are reinventing themselves as lifestyle centers, hosting events, and even art exhibitions. There are many benefits for brands, especially luxury brands, that tap into the influence of the elite art world in China. Contemporary art has arrived in the mainstream. And not every art fair visitor comes to actually buy art but often rather enjoys the entertainment aspect that the art scene offers.

When brands or real estates host events, it’s normal for them to pay lots of cash for celebrity appearances. Prices can reach one million RMB for tier two celebrities on special events like Christmas or New Year’s Eve (also in Asia hottest moments of the year for commercial real estates). But now art world people have turned into testimonials for brands, such as the Swiss curator Hans Ulrich Obrist, who became a face for a Brioni campaign. Judy Lam, the Assistant General Manager of K11, spoke about “The Mall as New Museum” and introduced the brand’s “art mall” vision. Not only in Hong Kong, but also with several outlets in Mainland China, K11 Concepts is very active in bringing art to a mass audience. This is achieved not only by presenting artworks in the mall itself, but also by commissioning world-class exhibitions for the integrated exhibition spaces, such as “Master of Impressionism – Claude Monet” in their Shanghai mall in 2014.

But it works also the other way around. When holding or sponsoring exhibitions, brands can reach museums’ and galleries’ VIP networks. These organizations help exposing the brand through exclusive openings. Many luxury brand-sponsored China exhibitions at prestigious museums and galleries merge art, branding, and the products themselves. In the case of branded exhibitions, the luxury products are placed alongside art in an equal setting as in Gucci’s recent “No Longer / Not Yet”exhibition at the Minsheng Art Museum in Shanghai, or the items become art themselves—such as when Dior had prominent Chinese artists design their own interpretation of the classic Lady Dior handbag for its “Lady Dior as Seen By” exhibition. Other examples include Bottega Veneta’s “Art of Collaboration” exhibition at UCCA in Beijing, Dior’s Shanghai exhibition in 2014 and Beijing exhibition in 2015 featuring the Miss Dior fragrance reinterpreted by 17 female artists. Luxury and art collaborations “work best when there is a true connection between the exhibition and the brand’s history, values, and marketing strategy in China. If these things are aligned, it becomes possible to find very interesting ways of co-branding that allow both parties to reach a larger audience.

"Dutch Design X" at Four Seasons Hotel in Beijing. Image courtesy of ubigallery.com

“Dutch Design X” at Four Seasons Hotel in Beijing. Image courtesy of ubigallery.com

The marriage between hospitality and luxury retail

The art community is not only flirting with shopping malls. Luxury art hotels have been rapidly popping up across China so quickly that fine art is almost a requirement for a new property to gain the attention of the ultra-elite. The idea that luxury can be a form of art in itself is gaining traction. While watches and jewelry have long been auction staples, leather goods are now entering the global auction scene, with China serving as the epicenter for the action. Top handbags are easier to sell and help to attract entry-level Chinese collectors to the auction scene. The auctions also don’t hurt the image of the luxury brands being sold, helping to solidify their status as investment pieces that will appreciate in value.

In China’s struggling high-end hospitality and luxury retail industries, a little strategic partnering with a luxury brand can be everything when it comes to elevating both brands in the eyes of the Chinese consumer. These partnerships allow guests to ‘experience’ the brands personally—as opposed to simply seeing them static on display in a store, or online. In today’s society in China where social class is very much defined by brand association, these collaborations have become a very popular means of defining ones own social status, and a personal statement of taste. One other result of these guest experiences is that they help secure market share and may boost sales for the hotels.

Image courtesy of mckynsey.com

Image courtesy of mckynsey.com

The unique show-off experience

Collaborations between brands with different industry backgrounds can very well help them to compensate and adjust the way their products are perceived. For example when releasing their smart watch in China, Apple made the effort to focus on meeting the demands of wealthy consumers by partnering with top luxury brands like Hermès to boost its status as a high-end brand, and put a fashion twist on what was so far a geek product.

These collaborations are especially useful to create unique experiences that customers can share in the form of videos, photos, selfies or live broadcasts. These type of experiences are the most important “social currency” in China these days. For brands to succeed, they need to give consumers unique ‘show-off’ experiences. When two brands join their forces to host an event, reveal a product or a collection it is more likely to be or to be perceived as a one off thing, or a limited edition product etc. Luxury experiences are becoming the new status for the wealthy in China. With an evolving perspective of what denotes wealth, brands need to find more ways to make consumers feel ‘rich.’

Read more:

Art and luxury in China brands reach potential new customers on a higher level

Rising stars on China’s retail scene homegrown multi-brand stores

Fast-fashion revved retail

Multi-brand stores of the Mainland

Style check why multi-brand sellers are key future China

China luxury market transforming

Interview with luxury vintage shop House of Willows co-founder talks classic style culture in China

Second-hand auto sales poised to accelerate in China’s maturing luxury market