China: luxury fashion still in demand

While the search volume for luxury fashion brands on popular Chinese web services like Baidu keeps going up, the footfall in stores is waning and thus store openings are also slowing down. This is what, among other findings, the “Digital IQ Index - Luxury China 2014” report by New Yorker business

intelligence service L2 found out. Part of the study were 95 international and five Chinese fashion, watch and jewellery brands.

Based on daily search volumes on Baidu, international luxury brands registered a 36 percent increase in year-on-year growth from 2013 to 2014 with fashion brands showing faster growth than watch and jewellery brands. French luxury fashion brand Chanel did particularly well this year, topping the list and overtaking compatriot Louis Vuitton (11,707 searches) with a record 12,745 daily searches, more than five times the index average.

Fashion brands Burberry, Prada, Calvin Klein, Armani and Christian Dior also made the Top Ten, namely in spots four, seven, eight, nine and ten, respectively, ranging in daily search volume between 7,920 and 6,943. Though not in the Top Ten, international fashion brands Oscar de la Renta, Michael Kors and Yves Saint Laurent were the winners of the year with an increase of search traffic by 199, 166 and 128 percent, respectively.

Mobile interactions gaining ground

Those brands investing in mobile apps and marketing in China will be happy to hear that overall daily search traffic in the fashion category increased by 110 percent; on desktops by 26 percent. In comparison, watches and jewellery gained by 60 percent (mobiles) and 10 percent (desktops).

Brick and mortar stores didn’t fare quite so well due to a slowed growth of the Chinese luxury market from 21 percent in 2012 to a mere 2 percent in 2014. Accordingly, two thirds of brands missed their 2013 targets for store openings. Swedish clothing company J. Lindberg, a newcomer with only one store in mainland China in 2012, opened the most number of stores in 2013 with close to 50; followed by Ralph Lauren with 25, one of the few to exceed their target, and Hugo Boss, almost reaching their target of 20 new stores in 2013.

Other fashion brands opening between three and eight stores in mainland China 2013 were (in descending order) Burberry, Fendi, Louis Vuitton, Prada, Chanel, Hermes and Paul Smith. Currently, only latecomers to the Chinese market like Michael Kors and Kate Spade are still opening new stors while early entrants are consolidating their business as foot traffic declines.

Images: Luxury China 2014