MARANELLO, Italy — As the Chinese market continues to accelerate at breakneck speed, so does the desire for luxury goods. And the consumer for those goods is still largely untapped, growing more sophisticated by the day.
The understanding of that changing consumer is essential to any long-term expansion in China, according to a panel of top fashion executives.
“We must not be afraid of a Chinese invasion; we are ready for China and China is ready for us,” said Renzo Rosso, owner of Diesel, who noted that the European market is “saturated” and that it is a must to seek opportunities in China and the U.S.
Rosso, who didn’t rule out production in China, said it was “fundamental to study the country and its culture,” in order to build business in China. “We know the Chinese people now go out at night, they are proud of their bodies and want to show their new clothes — there is a lot of energy,” he said. Rosso added that Diesel does not produce different collections depending on the country. “Young people listen to the same music, watch the same movies, and they want the same clothes,” he said.
Executives gave their views during a recent roundtable organized by The Wall Street Journal Europe and Class Editori, one of Italy’s main publishing houses. They addressed, among other points, the role of Italian design around the world, underscored by the symbolism of the meeting site — the Enzo Ferrari Auditorium, steps from the plant where the legendary Ferraris are produced.
“We must keep in mind that quality, design, attention to details, customer care and our team spirit differentiate us from our competitors and contribute to the success of the Made in Italy label around the world,” said Luca di Montezemolo, president of Ferrari and automaker giant Fiat, and president of Italy’s main industrialists’ association, Confindustria. “We must be proud of what we do and always strive to innovate our technology.”
Miuccia Prada, in a videotaped presentation, said she is focused on understanding who buys her products, particularly in China. “We don’t really know what [China] is, although we work within that country,” she said. “Rich people are similar around the world, but we must understand and study Asia’s sociological differences.” Prada noted that, in comparison with China, Japan is more “conceptual and sophisticated,” Hong Kong is “ultraglamorous and chic.” She joked that she’s been told many of her customers in China are bureaucrats’ mistresses. “I’m making a point of understanding who they are,” she said with a laugh.In addition to understanding customers in China, Domenico De Sole, former Gucci chief executive and current member of the board at Gap, said in a video conference that it is important to “educate your customers.” He cited eye health giant Bausch & Lomb for making major strides in China by addressing young university students directly. “They tell them how appearance is key to success and they teach them that it is important to change their contact lenses,” said De Sole. “This is another way to open a market [to your company].” De Sole also emphasized the importance of store displays, as these are the best way to advertise brands in China, after fashion magazines.
Whatever the strategy, Antoine Colonna, managing director, head luxury goods team, Merrill Lynch, urged brands to progress one step at a time. “Faster does not mean better,” he said. “We must view China as any European market: Those who saturated China considering it as one big outlet made a huge mistake — you must always control the value of your brand.” Colonna defined China as “the biggest Eldorado” and saw it as an already sophisticated market, noting that its growth was faster than Japan’s. “There are 25 million Chinese traveling and there will be 100 million in 2020. They spend an average of $1,000 in luxury goods, and they might save on dinner or lodging, but not on luxury goods,” said Colonna.
However strong China’s potential may be, Francesco Trapani, chief executive officer of Bulgari, said for his company, Japan, South Korea, Taiwan and Hong Kong are still more interesting than mainland China in the medium-term, given China’s comparatively lower spending power, as the average price of a Bulgari watch or jewel is higher than a luxury accessory. “China will be relevant for us in seven or eight years, not in one or two,” said Trapani. Bulgari has a store in Shanghai and one in Beijing and the company plans to open more stores in China as part of its overall Asian expansion strategy. “Three years ago, Hong Kong accounted for 2 percent of our sales, now it accounts for between 15 and 20 percent,” he said. At the same time, Trapani said although Bulgari has been present in Japan for 20 years, there are still “many opportunities to grow” and areas to expand in retailing and product in that area. Last year the company registered a 25 percent growth rate in Japan.While acknowledging the potential of the Chinese market, Michele Norsa, ceo of Valentino, said the U.S. market “is and will always be the premier luxury market,” and the U.S. remains “the main driver” for Valentino. Over 30 months, the Marzotto-owned company grew 25 percent in the U.S., expanding from 20 to 95 doors. “It is a market that moves much faster than Europe and it reacts the most to a turnaround: department stores are the best partners, they understand [our] strategies and support us. Bergdorf Goodman, Neiman Marcus, Saks Fifth Avenue and Nordstrom’s have played a crucial role [in our growth],” said Norsa. “It is the only country where you can change management and store managers in a week without being paralyzed by the unions,” he added. Norsa predicted that the American West Coast will be a bridge for China more so than Europe. “And this is a big risk for us here,” he said.
Handel Lee, co-chairman of development company House of Three Ltd., presented his “Three on the Bund” shopping and cultural project and said on the design front, “it’s still a long way to go before [fashion designers in China] challenge the West — China does not have mature designers yet.” Lee attributed this dearth of talent to coming from “50 years of not having a market sensibility in high-end fashion.”
The Middle East also emerged as a potential business outlet, as Majed Al-Sabah, owner of the Villa Moda stores, urged fashion companies to develop a better understanding of the region. Developments worth watching include: a change in demographics, with 70 percent of the population aged below 30, and very trend-savvy; the population’s thirst for technology, with people owning between six and eight portable phones per capita; a focus on well-being and the opening of many luxurious spas and health-oriented activities; its population’s wealth and disposable cash, as a result of the skyrocketing oil prices. “It is a potential that goes virtually unnoticed,” said Al-Sabah, pointing out that local tourism has grown exponentially. “Middle Eastern luxury customers fear they will be discriminated against abroad and would rather not leave their countries as much,” he said.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
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@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)