Luxury, Retail and FMCG News & Trends: July Week 4

Luxury, Retail and FMCG News & Trends: July Week 4

Luxury, Retail and FMCG News & Trends: July Week 4

1.Market

i. Hainan’s New 6-Day Visa-Free Policy Expected to Support Travel Agencies

What: China has introduced a new policy allowing foreign travellers to visit Hainan province visa-free for up to six days, provided they enter via Hong Kong or Macau and join a tour organised by a registered travel agency. This initiative, aimed at boosting tourism, will enable travellers from over 180 countries to explore Hainan’s renowned tourist spots without needing a visa.

Implications: This policy is expected to benefit travel retail and travel agencies, especially those targeting inbound tourism. Business growth for the latter is projected to be between 10 and 20%.

Read the full article about the six-day visa-free Hainan policy.

 

2. Business Moves

i. Prada to Open Largest Hong Kong Outlet After Years of Scaling Down

What: Prada is set to open an 8,000 sq ft store in Hong Kong’s K11 Musea, a luxury shopping centre by New World Development. This marks Prada’s first major store in Hong Kong since closing its flagship in Causeway Bay in 2020. The store’s rent will partially depend on sales performance.

Other global luxury brands, such as Louis Vuitton, Hermes and Chanel, are also making investments and a comeback to Hong Kong’s prime business districts. The trend is driven by property prices that have dropped considerably since the pre-pandemic era. The spending power of Hong Kong’s affluent residents and Hong Kong’s appeal to mainland tourists have also provided stability for these brands amidst a sales decline in mainland China.

Implications: The return of luxury brands to Hong Kong’s prime locations signals a revival of high-end retail in the city.

Read the full paid article about Prada’s Hong Kong outlet.

 

ii. EssilorLuxottica Buys Optical Investment Group

Eyewear conglomerate EssilorLuxottica acquired the Romanian optical chain Optical Investment Group. Formed in 2019 from a merger between Optiblu and Optiplaza, Optical Investment Group operates 99 stores, has a robust e-commerce presence, and employs over 650 people. The acquisition will conclude by the end of the year, pending regulatory approval.

Takeaway: EssilorLuxottica’s acquisition of Optical Investment Group shows the conglomerate’s strategy to enhance market penetration in Central and Eastern Europe.

Read the full article about EssilorLuxottica’s acquisition of Optical Investment Group.

 

iii. Chanel Secures €700m Through Private Placement

Chanel has successfully raised over €700 million through a privately placed bond sale. This method, known as a US private placement, allows blue-chip firms to secure funding directly from institutional investors like insurers, bypassing the volatile public credit markets. This strategy is becoming popular among major European companies, with other organisations like Ferrero, and Remy Cointreau having recently engaged in similar moves. The bonds, arranged by Goldman Sachs and Societe Generale, have maturities of 10 and 12 years.

Read the full article about Chanel’s €700 million fundraising.

 

iv. Billionaire Birla Seeks $25b Growth in Consumer Business

Billionaire Kumar Mangalam Birla anticipates significant growth in the consumer segment of his $65 billion Aditya Birla Group, projecting it to reach $25 billion in the next five years. The Group, which currently derives 20% of its revenue from consumer businesses, plans to increase this to over 25% by expanding into the gold jewellery market with a $597 million investment. The new jewellery brand, Indriya, aims to be among the top three jewellery retailers in India. The first batch of stores will open in Delhi, Indore, and Jaipur, and the brand plans to expand to more than 10 cities within six months.

Implications: This move reflects a broader strategy to bolster the Group’s consumer portfolio, including ventures in paints, telecom, fashion, and financial services. For instance, Grasim Industries has entered the paints business, targeting $1.2 billion in revenue within three years. Meanwhile, Vodafone Idea Ltd. also engaged in fundraising recently. Aditya Birla Capital Ltd. also launched a direct-to-customer app that seeks to add 30 million users in the next three years.

Read the full article about Birla’s business forecast.

 

v. Chinese E-Commerce Giants Shift Away from Price Wars

What: Alibaba’s Taobao and ByteDance’s Douyin are shifting strategies in response to China’s intense e-commerce price war. Instead of competing solely on low prices, both platforms are now focusing on supporting merchants and refining their pricing strategies. Douyin has tweaked its product recommendation rules to shift away from prioritising pricing. Meanwhile, Taobao and Tmall are waiving the annual software service fee and giving sellers more autonomy over handling refunds to retain quality merchants and reduce the emphasis on low prices. These changes are expected to foster a more sustainable and competitive e-commerce environment in China.

Implications: The changes are expected to foster a more sustainable and competitive e-commerce environment in China while demonstrating Pinduoduo’s ability to sustain low prices as a strategic advantage.

Read the full paid article about Chinese e-commerce giants’ new strategy.

 

3. People Moves: Chanel, Balmain, Blumarine, Shiseido and Jahwa

Chanel: Anne Kirby, Chanel’s President of Fragrance and Beauty, is set to retire at the end of 2024 after a successful five-year tenure. During her leadership, Kirby significantly strengthened Chanel’s Fragrance and Beauty division, contributing to the company’s impressive sales of nearly US$20 billion last year. Under her guidance, the division saw substantial growth across all categories and the launch of the Comètes Collective, which revitalised Chanel’s makeup division. Kirby’s efforts have bolstered Chanel’s brand equity and desirability worldwide. The company has not yet announced the successor. This change follows other recent leadership adjustments at Chanel.

Balmain: Balmain appointed Bruna Scognamiglio as the new chief marketing officer, effective September 9. She replaces Txampi Diz, who left the company in March after almost 20 years. Scognamiglio, previously the global brand and marketing director at Ferragamo, brings extensive experience from her roles at Procter & Gamble, Coty, and Tod’s.

Blumarine: David Koma, known for his sculptural designs and bold aesthetic, was appointed the new creative director of Blumarine. Koma will seek to align with Blumarine’s feminine aesthetic while bringing innovation and creativity to the brand. His first collection for the brand will debut with the pre-fall 2025 season. He succeeds Walter Chiapponi, who left the role after a brief four-month tenure.

Shiseido: Shiseido Company announced Kentaro Fujiwara as its new President and CEO, effective January 1, 2025. This change follows the retirement of current Chairman and CEO Masahiko Uotani, who will step down on December 31, 2024, and transition to a Senior Advisor role focusing on strategic advice and talent development. Fujiwara, who has been with Shiseido since 1991, has held various leadership roles in different countries and currently serves as President and COO. His appointment as CEO is part of a planned five-year succession strategy that started in 2019. Fujiwara is expected to continue with Uotani’s emphasis on innovation and global expansion.

Jahwa: Cosmetics company Shanghai Jahwa recently announced the resignation of its Deputy General Manager, Ye Weimin. Ye has played a crucial role in the company’s digital transformation and brand enhancement. Despite his departure, Ye will remain as an external consultant. This change follows the recent appointment of CEO Lin Xiaohai, which has garnered significant industry attention.

Ye’s career at Shanghai Jahwa was marked by significant achievements, particularly in market strategy and brand positioning, which helped Herborist and GF gain a strong market presence. Shanghai Jahwa is undergoing internal adjustments, including organisational restructuring and talent strategy upgrades, to better align with market trends. The new leadership, including the recent addition of Kevin Chen as the General Manager of the Beauty Division, signals a new development phase focused on brand rejuvenation and digital marketing.

Read the full article about the retirement of Chanel’s President Kirby.

Read the full article about Balmain’s appointment of Bruna Scognamiglio.

Read the full article about Blumarine’s appointment of David Koma.

Read the full article about Kentaro Fujiwara’s promotion to CEO.

 

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