Jimmy Choo chief executive officer Pierre Denis’ debrief of the Chinese luxury market, titled “Future China: Boom or Bust,” painted a bullish picture for the kingpin Asian economy, despite its ever-compounding complexities.
Denis, who joined Jimmy Choo as ceo in 2012, said that despite China’s recent currency devaluation and slowed growth, it’s important to “remember that 25 years ago, there was nothing there.”
The brand presently operates 18 stores in 11 of the country’s major cities. Denis pointed out that with 50 percent of China’s GDP stemming from its top 20 cities, Jimmy Choo, “still has potential to grow.”
The United States remains the brand’s largest market. Denis said that 15 percent of Jimmy Choo’s sales are of Chinese origin. He labeled this figure as “halfway down the road,” to the luxury industry norm, which he cited as one-third rooted in Chinese sales.
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The brand’s imprint, however, is showing signs of widespread growth in the Chinese luxury zeitgeist, Denis said. In 2014 the label was measured as having the most Chinese editorial features within the shoe category. Just two years prior, in 2012, the brand was ranked in 13th place on the same list.
Much of this increased awareness can be traced to celebrity. Denis said that when Jimmy Choo brought its Chinese operations in-house from a franchisee in 2012, one of its primary strategies was to carry the brand’s Western reputation of red carpet glamour, eastward. But this concept proved more complex than simply flying Angelina Jolie to a party in Beijing.
“Only 34 foreign films are actually distributed in China, which means that international celebrities have little bearing,” Denis said. The label took a ground-up approach — befriending a new generation of Chinese celebrities, which Denis labeled as “very powerful,” to give Jimmy Choo red carpet visibility.
The brand has also used the same approach to similar levels of success in Korea, Denis said.
Jimmy Choo, like the many other Western brands striving for success in China, is presently enduring the country’s “complex” economic state of currency shifts and a slowdown. Denis, though, appeared invigorated by the challenge — and pointed to key cultural factors that he feels prime the country’s luxury climate for continued expansion.
“China [this year] is still expected to grow 6.5 percent — this is higher than most countries in the world,” he said.
He noted that the country’s private wealth is growing, along with the sustained emergence of a middle class. The Chinese cultural component for gift-giving plays in luxury’s favor, too.
Denis also pointed to three major social shifts in Chinese spending that brighten his outlook for Jimmy Choo.
First is the “development of the status of women in China, the empowerment of women.”
“If you look at the luxury industry [in China], it used to be completely male-dominated, and now almost half the luxury industry products [sold] are women’s products,” he said. This figure has room for growth, according to Denis, who said that “the luxury industry, worldwide, is more than two-thirds dominated by women’s products.”
In addition to changes in gender-based spending, there is the matter of the Chinese tourism industry growing. “The [Chinese luxury] business has to not only be considered within China, but also outside China,” he said, citing the projected 242 million Chinese tourists expected to be traveling by 2024.
The country’s mall culture, too, provides widespread opportunity for luxury — providing a centralized location for brands to relay key messaging. “Yes, there are department stores in China, but the reality is that most luxury business is achieved with [stand-alone] retail stores,” Denis said.
“Shopping malls are always well-placed in the heart of cities, and are definitely a favorite pastime and attraction for the weekend.”
While Denis noted that development of new shopping centers has slowed, he said this has led to retailers refining their existing spaces to accommodate a market that is “becoming very sophisticated.”
While commercial real estate is cropping up at a decreased velocity, the Chinese interest in shopping malls has not slowed, according to Denis. “If you look at the structure of cities — I was recently traveling from Shanghai to Nanjing. I did the same road 10 years ago, and then you would see rice fields in between [the two cities]. Now you are seeing one city, this is 250 kilometers of buildings.
“It means that during the weekend you are not going to escape to the countryside, because it’s not there. So where do you go to meet friends in a place that is welcoming and exciting and interesting to go? In China you are going to shopping malls. This is where everyone is spending their life on the weekend,” he said.
To poise itself for success amid these “complex” opportunities, Denis said that Jimmy Choo has invested great efforts in its digital strategy. “We pride ourselves on being at the forefront of the digital space,” he said, and noted that, globally, e-commerce is the brand’s largest single source of sales — providing between five and six percent of turnover.
A U.S.-based retailer recently quoted the average Jimmy Choo Stateside consumer at approximately 45 years old. “In China, we take that down by about 15 years, from 25 to 35 years old, which means we are in the digital space,” he said.
But for now, the brand’s digital initiatives in China are solely for marketing and brand awareness purposes. The company has yet to approach e-commerce in the country, because “I think the market is not really there,” Denis said. “Elements are missing, like how to pay — a lot of the luxury market there is in cash. Also there is the [cultural] notion of ‘will the products that come be real or fake,’ because there is a strong tradition of fake in the country.
“The digital e-commerce space is not really there, which is fine, because we feel like we really have to develop the market first.”
But according to Denis, e-commerce will be on the docket down the road. “I think in the future, e-commerce will fly in China, if you look at other elements in the digital space, China is really at the forefront.”