Mercedes-Benz Korea is still committed to diesel despite a global shift to eco-friendly engines, such as hybrid or electric units. The Korean section of the German premium carmaker premiered a partially revamped model of its flagship C-Class sedan in Incheon on Friday, equipped with a diesel engine.
The C-Class sedan is one of Mercedes’ biggest models, having sold 9.5 million units worldwide since its introduction in 1982. Korea is the seventh largest market for the C-Class.
Although not a fully revamped version, some 6,500 parts, including engine parts, have been upgraded, the company said.
On Friday, Mercedes-Benz Korea showed a C 220d model with a four-cylinder OM 654 diesel engine, an interesting approach considering the industry’s shift to zero emissions.
“This diesel engine’s CO2 emissions are 15 percent less than the petrol engine [with the same 2.0-liter capacity],” said Jochen Betsch, head of advanced engineering diesel at Daimler, who gave an extensive presentation on the upgraded diesel engine at a press event Friday in Incheon.
Even while shedding 16 percent of its weight, the new engine added 24 horsepower to generate a maximum of 194 horsepower and torque of 40.8 kg.m.
“It gets quite obvious that Daimler has strong commitment for diesel,” Betsch said.
Dimitris Psillakis, CEO of Mercedes-Benz Korea, said a version with a gasoline engine will launch in the first half of next year, followed by a plug-in hybrid engine.
“A diesel engine has its strong points with performance and even CO2 emissions,” Psillakis said. “It is important to offer all the options out there to our customers.”
The press event Friday included an extensive presentation on the upgraded diesel engine, a move that many saw as a reference to rival BMW diesel models that experienced a spate of fires in Korea last summer. Psillakis, however, denied such speculation, saying the “customers have the right to know about the improved features of the new diesel engine.”
The new C-Class’ official fuel efficiency wasn’t disclosed.
Its price starts at 55.2 million won ($48.9 thousand).
A growing community of Korean women primarily in their 20s to 40s prefer renting high-end goods from subscription services such as Series Eight, The Closet and Reebonz Korea. Asked why they chooses to rent their wardrobe, they said the introduction of luxury goods rental services helped her prioritize living expenses and limit unnecessary spending on personal shopping.
By paying a monthly subscription fee of 79,000 won (US$70), Reebonz customers, for example, can rent up to two bags a month. Customers opting for pricier premium plans are given the option to rent a bag from the most expensive or popular brands for up to 10 days for prices ranging from 9,800 won to 19,800 won.
“Subscription-based business models have not seen much success in the local market compared to other countries. But, because luxury goods’ prices are so high compared to the low purchasing power of Koreans in their 20s and 30s, the (subscription) services are expected to see substantial growth in South Korea,” said Choi Kang-sik, a professor of economics at Yonsei University.
Choi said that with more women wanting to rent luxury goods, rental companies must better communicate with luxury brands in order to bring better products to the table.
“The power of luxury brands will always see an upward trend. The difference, now, will be that consumer groups won’t be women visiting department stores. It will be the luxury rental companies who will be supplying the bags to the original customer base,” he said.
Even though popular American designer rental services such as Bag Borrow or Steal and Rent the Runway launched a decade earlier, designer subscription services garnered attention from local consumers starting in 2016, according to Series Eight CEO Kim Tae-hyun.
Kim, who co-founded Reebonz Korea with current chief Ha Dong-gu, left Reebonz to launch the startup Series Eight under the Value Art Architect Group last year.
On the surface, the two companies share similar concepts with regards to lending customers a hand in renting high-end products.
If Reebonz sticks to a subscription model, Series Eight and its six-member team envisions a shopping platform beyond just a rental service where women can rent high-end bags whenever and for however long they please.
“We essentially did not want to give the idea of pressuring women to pick a bag every month just because they are paying a certain amount. The pressure in itself ruins the shopping experience,” Kim said.
In order for a business to be successful on a subscription-based model, it needs to provide convenience, value for the money and personalized experiences. Consumers will cancel services that do not deliver unique, excellent personalized experiences, according to Choi.
Park Sun-young, juggling being a mom and public relations director at an ad agency in Seoul, appreciates such unique value from subscription services. Unlike her younger colleagues who seem to have time to go shopping, Park would rather save money and time by renting her wardrobe online.
“I think young women may feel it’s weird to rent designer clothing and carry handbags that are ultimately not theirs. But, look inside your closet. How many bags are just sitting on the shelf collecting dust?” Park posed.
“Being a mom and having a job, the rental services make my shopping experience something I look forward to at the end of the night before I go to bed. Just scroll down, look through the catalogue and click order.”
VinFast, a subsidiary of Vietnam’s biggest private firm Vingroup, presented three models and their prices at its maiden show in Hanoi Tuesday afternoon. Its five-seat sedan Lux A2.0 and seven-seat SUV Lux SA 2.0, which had already been revealed to the public for the first time at the Paris Motor Show last month, cost VND800 million ($34,305) and VND1.136 billion ($48,709) respectively.
The smaller hatchback Fadil, presented for the very first time, costs VND336 million ($14,410).
These prices are exclusive of a 10 percent value added tax.
The company said it was announcing favorable prices for the “initial phase.” The original prices of the hatchback, the sedan and the SUV are VND423 million ($18,140), VND1.336 billion ($57,300) and VND1.818 billion ($78,000) respectively, it said.
VinFast surprised industry insiders by completing its first two units, the SUV and the Sedan, within one year.But VinFast did not say for how long the promotional prices will last or how many cars will be produced in the initial phase.
Its first two models are built on frames from BMW. Their components have been engineered by Canadian firm Magna International’s Magna Steyr, while design work was done by Italian design house Pininfarina.
The small hatchback, Fadil, meanwhile, was developed from the background of the Opel Karl Rocks model in the European market. Its structure is almost equivalent to the latest Chevrolet Spark generation.
Attending the exhibition, Prime Minister Nguyen Xuan Phuc said building strong Vietnamese brands means promoting patriotism, self-reliance and self-esteem and building a consumer culture in Vietnam.
“I hope more Vietnamese companies and entrepreneurs follow in the footsteps of VinFast to express an aspiration to dominate the domestic market and reach out to the international level.”
Vietnam’s population is around 93 million, larger than South Korea, but car consumption is only around 300,000 units a year, he said. Previously, Mike Dunne, an independent industry analyst who has spent more than three decades in Asia, said that he doubted VinFast cars would generate much demand in a country with an average income of $2,385 last year.
While there is little doubt the market would grow, it won’t happen fast enough to absorb VinFast’s production, planned at 250,000 vehicles annually, he added.
There are only 358 businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade. Over 90 percent of auto parts are imported, it added.
New data from Bain & Company shows global luxury goods sales will struggle to maintain growth, as the US-Sino trade war and other geopolitical events impact on consumer confidence.
In June, Bain said the personal luxury goods market was “on a tear” this year and would grow by between 6 per cent and 8 per cent at constant exchange rates to reach €276-281 billion. It said the market could reach €390 billion globally in sales by 2025.
But now, Bain has released a more tepid projection of €260 billion and a growth rate of 5 per cent this year.
It has pared back its 2025 projection of personal luxury goods sales to €320-365 billion, slashing €35 to €70 billion off its forecast in just five months.
And it cautioned that even this figure may be under threat saying “socio-political issues, commercial policies, and potential short-term soft recessions could make this road to growth a bumpy one in the short term”.
The Bain & Company Luxury Study was released in Milan in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers’ industry foundation.
In June, Bain said Mainland China is expected to account for the lion’s share of growth this year. “We forecast this market to grow by 20-22 per cent … Brands are learning how to cater to local consumers, often young and heavily influenced by social media.”
China kept close to its projections, rising 20 per cent, albeit with the year still not over.
“Chinese consumers are leading the positive growth trend around the world. Between 2015 and this year, their purchases in Mainland China contributed twice as much growth as their spending abroad. Their share of global spending has continued to rise (now estimated at 33 per cent of global luxury spend, up from 32 per cent in last year), while the share of Mainland China has also risen to 9 per cent (up from 8 per cent in last year). In Mainland China, luxury sales grew 18 per cent at current exchange rates to €23 billion (20 per cent at constant exchange rates), driven by rising demand rather than by price increases,” the report said.
Claudia D’Arpizio, a Bain partner and lead author of the study, said luxury purchases in Japan softened slightly this year, pushing brands to find new solutions to bring consumers back to stores. However, retail sales still grew at 3 per cent at current exchange rates to €22 billion. “Increased consumption from tourists in Japan is prompting brands to rethink their distribution models.”
Across the rest of Asia retail sales grew 7 per cent at current exchange rates to €39 billion, due to dynamic growth in South Korea, driven by strong local consumption. Brisk growth in other Asian countries – Singapore, Thailand and Taiwan – also contributed while Hong Kong and Macau benefitted from Chinese purchases.
Europe lagged in 2018 due to a strong Euro that impacted tourists’ purchasing power. Local consumption was positive overall, despite mixed country performance, helping to boost retail sales 1 per cent at current exchange rates to €84 billion.
The Americas grew 5 per cent at current exchange rates to €80 billion. “A positive US economy boosted disposable income and overall luxury spending from locals, even as brands remained wary of continued economic prosperity,” the report said. “However, the strong dollar impacted tourists’ spending from Asia and Latin America. Canada and Mexico were strong players in the region, while political uncertainties derailed Brazil’s performance.”
In other areas, there was nil growth, holding at €12 billion, mainly due to stagnation in Middle East brought on by a recent government spending restriction.
Luxury online
The retail channel grew 4 per cent this year, with three-quarters coming from like-for-like sales growth. Wholesale channels grew at only 1 per cent, brought down by high-end department stores still trying to recover, and a slow-down among specialty stores facing tough competition from online.
Luxury shopping online continued to accelerate this year compared with physical channels, growing 22 per cent versus 2017 to €27 billion. The US market made up close to half of online sales – 44 per cent– but Asia is emerging as the new growth engine for luxury online, slightly ahead of Europe. Accessories remained the top category sold online, ahead of apparel; beauty and hard luxury (jewellery and watches) were both on the rise.
Brands are catching up to other online players, comprising 31 per cent of sales, compared to e-tailers (39 per cent) and retailers (30 per cent).
“New technologies are at once enriching the online and mobile shopping experiences, while potentially putting role of physical channels at risk,” said Federica Levato, a Bain partner and co-author of the study.
“The luxury store-opening path is slowing down, leading to channel consolidation in the future. Brands must therefore rethink their physical channels and evolve their role from point-of-sale to point-of-touch, and use new technology to enhance customers’ in-store experiences.”
Luxury consumers getting younger
The report concluded that younger generations are becoming increasingly more important luxury brands. This year, Generations Y and Z contributed 100 per cent of the total luxury market growth, compared with 85 per cent last year. Bain predicts Generation Z, which today comprises just 2 per cent of the market will account for 10 per cent of it in 2025.
As aftershocks of the clampdown on Daigous continue to reverberate through the luxury shopping community in China, e-commerce platforms are rising to fill the gap.
The launch of China’s new e-commerce law, coupled with the 928 Daigou crackdown at the Pudong International Airport in Shanghai, has stirred up uncertainty in the global luxury industry.
In fact, LVMH share prices reportedly fell in early October due to fears of a slowdown in Chinese spending.
Earlier this month, Luxury Society attended the live seminar “Reinterpreting the 300-billion Daigou market” hosted by Tencent media.
During a debate, luxury e-commerce platform OFashion’s CEO Xiao Yu and N5 Venture Capital’s founder Xiao Yiwei shared their insights on how luxury buying will likely evolve in the post-Daigou era.
According to Xiao Yu, the estimated Chinese luxury spending in 2018 is 600 billion RMB and Daigou purchases account for half of that, making it an estimated 300-billion industry.
Without Daigou, what is the next best alternative for Chinese consumers looking to buy authentic luxury goods at lower prices?
First, let’s revisit the 928 daigou crackdown in Shanghai’s Pudong airport and take a look at how China’s 300-billion Daigou industry is in danger.
What Happened During The 928 Daigou Crackdown
September 28 2018 marked an important date in the history of Chinese luxury consumption.
In Shanghai Pudong airport, all passengers returning from Seoul were stopped by Chinese customs for baggage inspection.
Seoul has been a classic shopping destination for Daigous to obtain global brands at a discount. More than 100 passengers from same Seoul-Shanghai flight were found guilty of illegal imports.
It was every Daigou’s living nightmare.
One of them relayed the unfolding events through WeChat text messages. Screenshots of this message thread eventually made its way online.
The messages read,
“In the line to pay my fine”
“I was live streaming in duty free shop during the day, but live streaming fine payment during the night (face palm emoji)”
Source: Sohu, A Daigou’s WeChat record of 928 crackdown got popular online.
Whether as a full-time profession or simply a hobby, the Daigou business is one based on relationships.
In fact, the first clients of most Daigous are generally from his or her own social network.
Since Daigous operate in a legal gray area and rely solely on private transactions, customers often have a hard time verifying the authenticity of their purchases.
Needless to say, seeking redress in the case of fraud is difficult or near impossible.
Within the last decade or so, Daigous have become rather ubiquitous.
Chinese netizens often joke on social media that “everyone has a Daigou friend on his/her WeChat”, or “Daigou is our generation’s best marketing guru”.
Rumors of Daigous making a minimum of $100k USD a year and buying houses while still in college flood the internet, making the Daigou profession both a mysterious and highly coveted one in China.
On September 28, however, this all came to a screeching halt.
Within a night, the image of Daigous as self-made businessmen was reduced to that of illegal importers.
Chinese Luxury Consumers Have Changed
The Daigou business flourished in China largely because of strong domestic demand for global luxury products. This demand is quickly changing.
During the seminar, OFashion’s CEO Xiao Yu offered his observations on shifting consumer tastes by analyzing the purchase data of its platform’s 3 million active buyers.
Here are our major takeaways.
1. Chinese Consumers Love Buying “Hits”
The biggest difference between luxury consumers from China and those from mature markets is that Chinese consumers prefer mainstream “hit” items, while mature market consumers also buy a brand’s long-tail (niche) products.
2. Entry-Level Luxury Sells Best
Out of all the luxury product categories, entry-level items with a price range of 2000-5000RMB (430-730USD) exhibit the strongest sales performance.
3. Consumer Tastes Have Diversified
While Chinese consumers concentrated their research on highly famous luxury brands in the past, they are now much more receptive to niche brands.
Bestselling product styles have also shifted from traditional classics like the Salvatore Ferragamo ballet flat, to streetwear brands.
Additionally, Chinese consumers are now searching more about domestic brands compared to four years ago, when most searches were about established global brands.
4. TheLipstick Effect Doesn’t Quite Apply In China
Considered an entry-level luxury product, lipsticks have been selling like hot cakes in the Chinese market recently.
While the “lipstick effect” – a global economic theory that postulates the correlation between beauty product sales and economic downturns – may hold true in many markets, industry professionals have stressed that it might not necessarily be the case in China.
While China might be in the midst of a lipstick craze, experts have noted that lifestyle brands that are inspiring, soulful, and fun, can still rise to the top of the market quickly.
How Platforms Can Rise To The Challenge
Now with the individual Daigou business in danger, it’s time for luxury cross-border platforms to shine.
As the live seminar’s two speakers noted, inefficiency is still a huge pain point in the cross-border industry.
That said, cross-border solutions aiming to improve efficiency would likely to grow fast.
As the luxury buying business faces tightening controls by regulators, consumers are turning to professional buyers, reliable platforms, or buyer’s platforms — a combination of the former two.
Besides established luxury e-commerce platforms such as Tmall Global, JD’s Toplife, Secoo and VIP, platforms that specialize in serving professional buyers are booming, too.
Tmall Global’s Luxury Direct has turned buyers into consultants and made fashion-consulting service a selling point.
The platform’s “About” page reads, “Our buying team takes orders straight from fashion weeks and selects products from brand official showrooms all across Europe.”
OFashion’s app “Buyer Box”, an app targeting professional buyers, has even a CRM (Client Relationship Management) system for users to personalize a client’s order.
Williams-Sonoma and Reliance Brands plan to launch Pottery Barn and West Elm in India through a franchise agreement. The opening of the brands’ first stores will be in Mumbai in early 2020, along with the launch of e-commerce websites.
President and CEO of Williams-Sonoma Laura Alber said the partnership with Reliance marks part of the company’s continued global expansion. “We are looking forward to opening our first stores in Mumbai and introducing our distinctive brands, excellent customer service, and exceptional products to customers in India.”
Executive VP, Global of Williams–Sonoma Ronald Young said the company currently operates its own and franchised stores across the world with company-owned stores in the US, Canada, Australia and the UK.
“Our franchise network includes countries throughout the Middle East, South Korea, the Philippines and Mexico. Adding Reliance to our franchisee network is a significant step in our continuing global expansion.”
President & CEO of Reliance Brands Darshan Mehta said the company is confident of the success of Pottery Barn and West Elm in India, believing the brands’ heritage and designs will resonate with Indian consumers.
National flag carrier Garuda Indonesia’s share price surged 19 percent on Thursday after the airline said it had taken over operational control of low-cost rival Sriwijaya Air. The move is seen as an effort to help Sriwijaya improve its financial performance, while potentially expanding Garuda’s market share to challenge Indonesia’s largest airline company, the Lion Air Group.
Garuda announced the joint operation through its subsidiary, Citilink Indonesia, on Wednesday after signing an agreement with Sriwijaya Air and NAM Air – both under the Sriwijaya Air Group – on Nov. 9. The partnership could also be escalated to share ownership in the Sriwijaya Group, Garuda said in the statement.
The joint operation will give the flag carrier a combined 46 percent share of the country’s domestic aviation market, while the country’s largest budget carrier, Lion Air, controls 51 percent, according to the Sydney-based CAPA Centre for Aviation.
The remainder of the market is shared by the local unit of Malaysia-based AirAsia, charter service Susi Air and Jakarta-based Trigana Air Service.
“The joint operation is intended to help the Sriwijaya Air Group improve its operational and financial performance to help Sriwijaya fulfill its commitments to third parties, including those within the Garuda Indonesia Group,” Garuda managing director Askhara “Ari” Dhanadiputra said in a statement.
Sriwijaya Air planned to undertake an initial public offering last year, but its weak financial performance put a stop to that.
The carrier suffered a loss last year due to rising fuel costs and the weaker rupiah after three profitable years. Most of Sriwjaya’s revenue is in rupiah, while the carrier’s expenses are mainly in US dollar, including fuel, aircraft maintenance and debt.
According to Garuda’s financial report, Sriwijaya owed the flag carrier around $9.33 million as of Sept. 30 this year for the overhaul of 10 CFM56 turbofan aircraft engines.
“We hope the partnership will help restore the financial performance of the Sriwijaya Air Group amid increasing competition in the domestic aviation industry. We believe the Garuda Indonesia Group has an excellent ability to manage the airline business,” Sriwijaya Air managing director Chandra Lie said.
Price War
Domestic air traffic in Indonesia more than tripled over the past decade as rising prosperity and lower fares made flying affordable for more people.With 129 million passengers in 2017, Indonesia is the world’s 10th-largest aviation market and it is projected to continue growing.
Transportation Minister Budi Karya Sumadi expressed hope that the consolidation between Citilink, Sriwjaya Air and NAM Air would also help end a ticket price war among local airlines.
“We hope this would end the price war and establish a new price equilibrium that covers the costs and margins to allow every airline to grow,” Budi said on Thursday.
His ministry has long held the view that airlines’ race to the bottom in their price offerings would put pressure on their finances, which could make them more likely to neglect safety precautions.
Budi said the joint operations between Citilink and Sriwijaya could also help to reduce redundancy on some of the country’s busiest routes and divert resources to other destinations.
“There are many airports in eastern Indonesia that want to be served,” he said.
The luxury childrenswear market is forecast to reach $6.6 billion in 2018, up by 3.8 percent year-on-year, presenting ample growth opportunities as spending power increases and parents dish out upwards of $500 for a pair of miniature Gucci loafers to match their own.
Brands from Gucci and Balenciaga through to Burberry have their own multi-million dollar childrenswear lines (the latter made £117 million in revenue in 2017, about $153 million) which largely shrink runway looks from ready-to-wear collections to fit young children rather than designing them from scratch, hoping to bank on a mother’s desire to wear matching pieces with her daughter.
But putting celebrity power to one side, as Kim Kardashian West signaled that mini-me dressing is once again big business by stepping out in a matching outfit with her daughter, what else is driving this phenomenon that seems to reappear every few years?
“Childrenswear is increasingly trend-oriented,” says Nathalie Christen-Genty, the founder of Paris-based Melijoe, the luxury e-commerce site dubbed “the Net-a-Porter for childrenswear.” “A few years ago, childrenswear was dictated by just a few kids-only brands and parents’ motivation to buy was first and foremost driven by practicality,” meaning pieces for children were designed specifically for them with a timeless and classic design in mind.
In the recent past, matchy-matchy ensembles were considered passé, reminiscent of bygone eras like the 1960s when women would make garments for themselves and their children from the same piece of fabric.
When luxury brands began launching childrenswear lines in the 2000s, “they didn’t think it would be big business,” says Giuliana Parabiago, a consultant at Pitti Bimbo, a key international childrenswear trade show where the latest trends are often discovered. They would use past-season styles that would be delayed by six months or a year, she says, but now childrenswear and ready-to-wear runs at the same speed. “This new generation wants to be young — and matching.”
Chloé launched its children’s line in 2010 with licensee Children Worldwide Fashion (CFW), which also makes lines for Givenchy, DKNY and Little Marc Jacobs.
For the current season, stand-out pieces include a velvet bomber jacket with horse embroidery and a pair of suede ankle boots — mini-versions of products creative director Natacha Ramsay-Levi sent down the runway.
“The pieces which are obviously Chloé, [for instance] the horse pattern, tend to perform better,” says Geoffroy de la Bourdonnaye, the brand’s chief executive who credits the success of mini-sized versions to the fact that some “mothers take pride in seeing their daughters look like themselves” and that others want “to share the brand’s DNA of being ‘free’ with their children.”
“The [childrenswear] business has consistently grown for the last eight years,” he adds. “The countries that spend a lot of money to dress their kids tend to be Russia and the Middle East, along with China. Countries in Latin America also invest in their kids.”
While Chloé’s relationship with its licensee means there is constant contact with the ready-to-wear design studio and the capacity for CWF to select the runway pieces it wants to adapt for children, Dolce & Gabbana’s approach was to take its line in-house allowing it to have complete control like Ralph Lauren, Burberry and Dior Baby who also go it alone.
However, such arrangements are still unusual; most luxury brands sign with a handful of specialist licensees. Simonetta produces childrenswear for Balmain and Fendi Kids; Kidiliz Group has the license for Kenzo Kids, Paul Smith and Levi’s Kids; and Brava Kid takes care of the brands under the OTB umbrella which include Diesel, Marni and Trussardi Junior.
The reason that the license route is so popular is that childrenswear requires an expert hand since it is not as simple as it may seem to scale down a garment pattern to fit the body shape of a child. The specialist experience on offer by the licensed manufacturers means they also understand intuitively how to make an outfit appropriate for children.
The movement has also helped drive childrenswear into the same trend cycle as womenswear as brands respond to demand by bringing out more novelty.
“Children’s lines [now] have their long-awaited collections as much as the ready-to-wear for the parents,” says Emi Ozmen, the mother of one of the child vloggers behind Silver and Lux.
Source: @beyonce
Dolce & Gabbana launched a four-week kids pop-up at Net-a-Porter, including a £1,100 tiered fil-coupé silk-blend dress for ages two to six, a £775 satin-trimmed brocade suit for ages two to five and an array of handbags and footwear.
“When [the mini-me trend] is executed well, it’s incredibly fun and expressive,” says the site’s global buying director Elizabeth von der Goltz. “It’s performed particularly well in the Middle East.” Having launched Gucci and Dolce & Gabbana capsules, Net-a-Porter’s next collaboration is with Moncler for miniature-sized puffer jackets.
However, not everyone sees the trend as a harmless way for kids to bond with their parents; some find it incredibly uncomfortable and question the subtle messages it seems to underscore.
“Two troubling phenomena converge in this mommy-and-me thing,” said Natalia Mehlman Petrzela, an associate professor at the New School in Manhattan. “There’s the infantilisation of women to look like little girls and, on the flip side, [the pressure] for young girls to always look older— to wear bikinis and crop tops.”
Some mini-me dressing is criticised as a gimmick; there is a fine line between matchy-matchy dressing and ill-fitting clothing to be worn once and thrown away.
“It’s clever marketing and appeals to emotional values,” says Jane Lewis, the founder of womenswear line Goat.
In August, the brand launched a mini-me line of dresses for girls with the design remaining unmodified bar reducing the size — the crepe dresses have a timeless feel to them. “Again, it depends — I’m not going [to do] a pink bomber jacket. There’s going to be a distinction between viable mini-me childrenswear and the theatrical element.”
Foraying into theatre is something SemSem founder Abeer Al Otaiba is also weary of.
The Emirati entrepreneur launched the brand after seeing a gap in the market — there was an absence of stylish yet understated occasionwear for mothers and daughters. “It’s more of a lifestyle, and mothers in [markets like Russia and the Middle East] enjoy elegant pieces for themselves and their daughters all within one brand. It’s unique to find a brand that caters to both,” she says.
SemSem’s Spring/Summer 2019 collection features matching lamé mother-daughter dresses and shirt dresses made from the same cotton fabric. Rather than shrinking women’s dresses to children’s size, Al Otaiba prefers to play around with fabrics and silhouettes.
A far cry from Kardashian’s more literal matchy-matchy approach.
Yet, social media and Instagram influencers continue to be the main driver of mini-me mother-daughter dressing.
While the trend has long been popular in the Middle East and Russia, it has rapidly expanded to the US thanks, in part, to celebrities like Beyoncé, whose Instagram in matching Gucci with her daughter Von der Goltz cites as an example of celebrity culture popularising mini-me.
Indeed, mommy-and-me looks drive likes and engagement, becoming good reasons for multi-brand retailers such as The Tot, a Dallas-based childrenswear store founded by Nasiba Adilova, to approach companies and ask for small-sized pieces of womenswear best-sellers.
“The era when childrenswear was entirely functional is over,” says Christen-Genty. “It’s now firmly in the territory of fashion.”
As one of Asia’s leading retail hubs, Hong Kong has long been a mecca for luxury shoppers. Despite being home to APAC’s most expensive retail real estate (second globally to New York City’s 5th Avenue), there’s a reason why large, sprawling luxury shopping malls continue to dominate in a crowded city.
Hong Kongers will be glad to know, though, that it holds its own when it comes to homegrown luxury spending, which recently overtook foreign consumption at 55% of total purchases.
This figure is staggering when considering the total population of Hong Kong is roughly 7.3 million people, less than a quarter of the 60 million visitors it hosts each year.
For these locally based consumers, luxury isn’t a one-off, aspirational purchase — it’s an innate part of their lifestyle, which explains why 93% of shoppers intend to maintain or increase spending in luxury goods in the next five years.
This holds true especially for the younger millennial shoppers who will be driving the majority of the growth going forward.
Source: Think with Google
The evolving nature of consumers is a common challenge for many marketers, and the luxury industry is no exception.
The task at hand for brands in Hong Kong is to understand this distinct group of younger customers and the behaviors that shape their expectations when it comes making high-value purchases.
A curious and demanding bunch
Reportedly, 90% of luxury shoppers conduct research online before making a purchase, and brand websites and search engines are the two most popular sources people turn to. In fact, they’ve become the digital storefront for this generation of digital natives.
Source: Think with Google
Having grown up with readily available information online, millennial and Gen Z consumers spend more time on research than ever before.
In fact, 89% of shoppers aged 18-34 spend up to three weeks researching a luxury purchase. And they’re not alone: 64% of consumers over 45 will spend the same amount of time on research leading up to a purchase.
Source: Think with Google
Retailers may have once treated online as a separate channel to physical stores, but this notion is quickly becoming outdated.
Whether customers are online or offline is a distinction made by businesses, not consumers.
Online and offline consumer behaviors are increasingly blurring, and the respective experiences need to follow suit, particularly when it comes to the inspiration and research phases.
In short, consistency across the two worlds is key.
It’s hard to imagine a luxury label leaving a customer linger unattended to in its boutique, so, by the same token, a customer should never be left unanswered or ignored on Google, YouTube, or social.
More is more
With a more exploratory consumer mindset, brand loyalty may be more elusive for brands targeting younger shoppers.
Engaging potential millennial and Gen Z luxury shoppers constantly by trying to stay top of mind and being always on will be crucial to gaining consideration.
In today’s environment of fast fashion and overnight style sensations — while couture brands used to produce two collections per year, they now produce five to six — one of every three consumers surveyed said they make luxury purchases to keep up with trends.
The tendency to shop more often is evidenced among shoppers aged 18-34, of whom 52% reported making premium purchases once every three months, compared to just 41% of shoppers 35+ who did the same.
Source: Think with Google
In addition to a higher frequency of purchase, our research also shows that millennial and Gen Z shoppers are likely to consider a wider breadth of brands. On average, this group owned products from a repertoire of four to six brands; compared to more brand-loyal 35+ shoppers, who owned between one and three brands.
Source: Think with Google
Inspiring online with offline
When it comes to in-store shopping, the aspects that customers value most are: 1) guaranteed authenticity, 2) the ability to touch and feel the product, and 3) personalized customer service.
How might these values translate online? With 63% of people expecting the same high-touch brand experience online and offline, the challenge is to emulate these qualities and provide satisfying digital experiences.
Offering free shipping on returns, for example, gives peace of mind to customers wary of counterfeit goods. Similarly, detailed product videos on the brand site or as a pillar of content on YouTube can help shoppers inspect items for quality while engaging them in a rich experience.
Leveraging customer data, such as previous purchases, to create individualized interactions and recommendations is no longer a nice-to-have, but a must. Just as consumers expect personalized customer service in store, personalization is fundamental for designing a top-notch digital brand experience.
Source: Think with Google
The shopping experience begins online for Hong Kong’s luxury consumers.
Search and brand sites are key because 90% of purchases are digitally influenced.
Millennial and Gen Z consumers spend the most time on research, so it pays to provide as much information as possible to this group. They also purchase more frequently, and they consider more brands when they do so.
To stay top of mind, brands should ensure that they are present at as many touch points as possible and that their media strategies are always on.
Expectations for online shopping are growing higher by the day, and this is especially true for premium brands.
A $500 million complex including horse racing in Soc Son District is off the shelf after 10 years. Hanoi authorities have approved the addition of the long-delayed Soc Son multi-purpose entertainment complex and horse racecourse project to the city’s master plan on socio-economic development to 2020 with orientation until 2030.
The total investment for this project is currently estimated at about $500 million. The project is expected to go into operation after 2021.
The planned site is mostly agricultural land. Once put into operation, the project will employ an estimated 5,000 direct laborers and 20,000-25,000 indirect laborers, generating a relatively large, regular revenue for the city’ budget.
The project, which will be built in a planned tourist area about 40 kilometers north of Hanoi, will add a high-quality tourism product to Soc Son District in particular and the capital in general, the city stated.
According to Hanoi authorities’ data, the capital has received over 26 million visitors this year, including 5.7 million foreign visitors, which are a 9 percent and 16 percent increase compared to last year respectively.
The project to build a horse racecourse in Hanoi was first researched in 1999, with the racecourse’s proposed location in the southern districts of Hoang Mai and Thanh Tri.
However, as Vietnam’s legal framework for sports betting and horse racing was incomplete at the time, the city’s foreign partner eventually withdrew from the project.
The project was then revived in 2007 when the travel company Hanoi Tourist and South Korea’s Global Consultant Network asked for the city’s permission to research it, and was told by the government that it would be approved once the legal framework for sports betting is completed.
Vietnam’s legislative body, the National Assembly, approved a bill legalizing sports betting last year and the government earlier this year promulgated a decree regulating the sports-betting business, throwing open opportunities for foreign investors to build racecourses in the country.
In addition to the racecourse in Hanoi, foreign firms are also said to be pursuing plans to build horse racecourses in the northern provinces of Bac Ninh, Vinh Phuc and in Ho Chi Minh City.
Vehicle sales in October 2018 were up marginally 0.5% to 47,273 units from 47,041 units in the same month a year ago, according to the Malaysian Automotive Association (MAA). However, MAA said the sales volume in October 2018 was 51% higher than September 2018, due to availability of stocks replacing the depleted post-zero Goods and Services Tax (GST) period.
In addition, it said year-to-date, the total industry volume (TIV) was 6% higher than the similar corresponding period in 2017.
The sales volume for November 2018 is expected to be slightly better than October 2018 on the back of new model launches and aggressive year-end promotional campaigns, it added.
German fashion retailer Hugo Boss sees Asia as a cornerstone of its growth strategy, saying while it already enjoys above-average growth in the region, there is potential for more. In a briefing to investors in London, the company’s managing board said it expects Asia will account for 20 per cent of its global sales by 2022, up one third from the current 15 per cent.
“The board is convinced the group still has considerable growth potential particularly in Asia. Sales in the region are expected to increase on average at a double-digit percentage rate per year by 2022, with China playing a key role,” the company said in a statement.
“In addition to the optimisation and expansion of the local retail network, the online business, also in cooperation with various multi-brand platforms, should contribute to above-average sales growth in particular.”
Globally, Hugo Boss will focus on personalisation and speed to boost brand desirability between now and 2022. The company plans to increase currency-adjusted sales by between 5 per cent and 7 per cent annually for the next four years and grow its operating margin to 15 per cent. Operating profit will grow “significantly faster than sales,” the company said.
“We have set ourselves high targets for the coming years”, said CEO Mark Langer.
“We want to grow faster than the market, and expect our operating profit to develop significantly better than our sales. The successful realignment of our brands Boss and Hugo has laid the foundation for this. We will further increase the personalisation of our offerings in the future and speed up central processes in the course of further developing our strategy. Our overall aim is clear: We want to be the most desirable premium fashion and lifestyle brand globally.”
Personalisation will be developed by adopting a more individualised customer approach, a personalised product range, “a unique shopping experience” and by building on its extensive experience in made-to-measure clothing.
On the speed front, Hugo Boss plans to make its business processes “considerably more agile”.
“This will enable the company to react to customer needs and to new market trends even more quickly and flexibly in the future. The existing skills of Hugo Boss in product design and development, our modern logistics and IT infrastructure and the use of digital showrooms will be the key levers,” the company said.
It also plans to quadruple its own online sales by 2022.
Hyundai Motor premiered the latest version of its Santa Fe SUV at an international auto exhibition in Guangzhou on Friday in its latest move to try and woo Chinese buyers. It also rolled out a reshuffle of its Chinese business. Vice President Lee Byung-ho was promoted to president of Hyundai Motor and Kia Motors’ China Business Division, the carmaker announced Friday.
The automaker showcased the fourth-generation Santa Fe, which has been strategically modified for the Chinese market. The new edition is the most futuristic Santa Fe on the market anywhere in the world, including the models sold in Korea.
After hitting rock bottom in the past two years due to diplomatic tension over the deployment of the U.S.-led Terminal High Altitude Area Defense antimissile system in Korea, Hyundai Motor has been slow in recovering sales in China. In the third quarter, it sold 177,000 units, a 6.2 percent year-on-year drop.
Hyundai Motor said it has installed a fingerprint scanner on the door – a global first – allowing owners to lock and unlock the door without a car key. The fingerprint scanner can also turn on the engine and automatically adjust the seat and side mirror to the owner’s liking.
The new version is also bigger than the latest Santa Fe that launched in Korea in February.
The length was extended by 160 millimeters (6.3 inches) and the wheelbase by 100 millimeters, enlarging the space for the second and third row passengers. Other smart car technology included in the vehicle is similar to the version available in Korea.
The car is equipped with a Rear Occupant Alert system that alerts the driver when a passenger is left behind in the back seat through ultrasound detection. It is the first time Hyundai Motor has installed such a system in cars launched in China.
The Santa Fe is also equipped with Safe Exit Assist, which prevents collisions with oncoming traffic when exiting the vehicle.
The car is also equipped with voice recognition through a partnership with Chinese IT giant Baidu.
“The latest Santa Fe stands in the center of Hyundai Motor’s continuous attempts and innovation toward the ever-changing needs of the customer,” said Beijing Hyundai in a statement. “The Santa Fe will bring about changes in the premium SUV market in China with its top-notch safety and smart car features.”
The car will go on sale starting in the first quarter of next year in China.
Hyundai Motor set up a 1,820-square-meter (19,590-square-feet) booth at the Guangzhou International Auto Exhibition where its latest lineup of 18 cars, including a concept version of the large Grandmaster SUV and N series vehicles, such as the Veloster N and i20 WRC, were on display.
It also showed off its hydrogen-powered Nexo SUV.
The auto exhibition in Guangzhou runs from Saturday to Nov. 25.
Foreign home interior brands and designers are present in force and dominating the increasingly affluent Vietnamese market. Brands like Cassina, Badari Lighting, Cantori, Diemme Cucine, Formitalia, and Versace Home have entered the high-end interior market in recent years.
According to the Vietnam Chamber of Commerce and Industry (VCCI), some 80 percent of luxury woodwork and interior decoration items is imported from Europe, with local players making up the small remaining portion. The market is valued at $2.5 billion.
Ly Qui Trung, general director of AKA Furniture Group, said the expansion of the “middle and affluent class” has boosted demand for luxury interior items.
“It is no wonder that many high-end international interior brands have started rushing into the Vietnamese market.”
The middle and affluent class, categorized as those earning $714 a month or more, would double to 33 million, about a third of the population, between 2014 and 2020, the Nikkei Asian Review reported recently citing a study by the Boston Consulting Group.
Market research firm Nielsen estimates the number of middle and affluent class Vietnamese to reach 44 million by 2020 and 95 million by 2030.
Paolo Lemma, Italian trade commissioner to Vietnam, believes there will be higher demand for interior design items in future due to the booming real estate market.
According to the HCMC Handicraft and Wood Industry Association (HAWA), woodwork furniture consumption last year was estimated at over $3.2 billion and that number is expected to reach $4 billion this year.
Huynh Van Hanh, vice chairman of HAWA, said the industry’s average growth rate has been 8 percent in the last seven years, and his association encouraged domestic manufactures to enter this growing market.
Trung said his company would seek to tap the growing high-end segment in future, and expected fierce competition between domestic and foreign brands.
Last year Vietnam exported $8 billion worth of wood and forestry products and has a target of $9 billion this year.
Danube Home, part of Dubai-based diversified business conglomerate Danube Group, has forayed into India by opening its first store in Hyderabad in October 2018. The brand has high hopes for the Indian market. In an exclusive interview with IMAGES Retail, Shubhojit Mahalanobis, General Manager, Danube Home says, “We see India as a country with huge potential, offering an incredible opportunity for growth. The real estate sector is at its peak in India with numerous properties, towers, communities and complexes coming up for both residential and commercial purposes. This directly contributes to a rise in demand for home furnishing products and solutions. Moreover, demonetization and GST has made operating in India much easier for international brands.”
“Reports say India is expected to see a faster expansion of urban population consisting of aspirational millennials and middle class families with spending power that will trigger the growth in demand for affordable home furnishing products and solutions. For a brand like Danube Home that offers home furnishing products and solutions, this is a very promising time to enter the country,” he adds.
Danube Home, which will be sourcing 30 percent from India to complement the government’s initiatives, has done an extensive study on Indian consumers, their buying behaviours, color and lifestyle patterns. Based on the research, the store that spans across 60,000 sq. ft offers more than 20,000 products under one roof targeting the middle and upper-middle segment of pyramid.
The USP
The Danube Home store in Hyderabad has all the key features and benefits that global consumers are experiencing across the Middle East. However, its India product portfolio will be a lot different from the Middle Eastern market.
“We have handpicked collections to cater to the well-travelled modern Indian consumer with products from various parts of the world such as US, Netherlands, Spain, Italy, Russia, Malaysia, Turkey, Egypt, UK and China, to name a few, giving customers a great opportunity to shop the best quality products at value for money price,” states Mahalanobis.
“In addition to this, customers will enjoy free interior designing services and seamless payment solutions with consumer financing options,” he states. These key features ensures 90 percent of repeat customers.
Danube Home, which starts as an online player and plans to go Omnichannel eventually as traction picks up, aims to offer complete home solutions, for instance other brands who sell sofa or beds do not sell wall paper or customized curtains, but Danube offers end-to-end solutions that include everything from outdoor furniture to sanitary ware.
“We focus a lot on our customer service standards and ensure both pre and post sales is a memorable experience which is why we have been awarded the No. 1 furniture retailer by the Dubai Government. We have a dedicated post sales team that makes direct calls to ensure everything goes smoothly post sales. This is an important step of the whole brand experience,” explains Mahalanobis.
Their customers also experience Augmented Reality, Virtual Reality, Online Seamless Shopping and many new technologies that Danube offers in its markets abroad. Customers will also be able to walk through their dream home in Virtual Reality.
“Danube Home offers global quality products at local price. We source our products from across the world and design our collections looking at customers behaviour and needs. Gradually, the Indian consumers shall experience various innovative and engaging little touches which we hope will be unique to us. That is what the brand is all about,” he adds.
Marketing Plans
As far as marketing plans of the brand is concerned, Danube Home has mixed conventional and unconventional mediums to connect with the brand’s ethnicity. The brand has taken the ATL, BTL, social and guerrilla marketing routes.
“We have added fun, interactive elements and image build up activities. We are targeting middle class and upper middle class millennials, double income no kids section and nuclear families. Our key focus remains with builders, architects and the designers’ segment, who shall be amazed to see our collection and price offerings for their projects,” says Mahalanobis.
The brand will be using all the mediums – print, TV and online – to advertise itself in India to get the maximum ROI. Human Resources
Besides, the entry of the brand in the Indian market will not only create 1,500 direct jobs, but also support local industries that will benefit from the supply chain as it will deepen, sourcing products from every nook and corner of India.
“This will also help us to create a greater demand for Indian designed home décor and home furnishing products and export them to other markets – such as the GCC – where we have a strong presence,” states Mahalanobis.
Each store of the brand will employ around 85-100 direct employees and 50 indirect employees, logistics department will have 50-75 employees during the initial days and gradually with the increase in strength of stores, the count will also increase.
“We hire the best from the industry, train them rigorously sharpen their skills aggressively and keep them motivated for a long period of time to deliver great results. The India team will also experience our team bonding and training methods, and hopefully, they will also deliver miraculous results,” he says.
The brand believes in flexible work culture driven only by performance based rewarding, empowering the team and giving them enough freedom to bring success.
Apart from this, Danube Home has a plethora of employee engagement activities like multiple outbound training programs at various levels, product launches at off-sites involving the power sellers, runs reward programs and engage in healthy competition atmosphere within each peer group.
Future Plans
Danube Home plans to set up 10 large format showrooms, a large logistics hub, transport network and associated facilities in the next 5 years.
“We have identified potential locations across the North and South Indian States. Once the properties are signed, the plan would be disclosed,” says Mahalanobis.
The average store size in India will be between 40,000 – 50,000 sq. ft depending upon the space and layout of the store. Depending upon the size of each store, average investment per store will be Rs 40 crore. The brand is already in talks with few big mall developers and hopes to partner with them for aggressive pan India expansion.
“We target to grow 15 percent like-for-like each year for the initial 5 years. We don’t want to be bullish about the growth unless we settle down and understand the market deeply,” he concludes.
