Luxury, Retail, FMCG and Media News & Trends: Oct Week 2
Luxury, Retail, FMCG and Media News & Trends: Oct Week 2
1. E-Commerce Business Moves
i. China’s E-Commerce Giants Alibaba, JD Progress Towards Integration
China’s major e-commerce platforms, including Alibaba’s Taobao and JD, are integrating payment and logistics services, providing consumers with more options. This shift follows recent regulatory changes for the internet sector that were launched to prevent unfair competition among platforms, ensure market order, foster innovation, and safeguard the rights of operators and consumers. Key developments include:
- WeChat Pay is now accepted on Taobao, complementing Alipay and credit/debit cards.
- JD Logistics will offer delivery services on Taobao while adopting Alipay.
Takeaway: The integration marks a significant change from previous isolated operations. Experts believe this collaborative approach is necessary as market growth has plateaued. It allows platforms to tap into new customer segments and enhance user loyalty. While the full impact of these changes is yet to be seen, price competition is expected to remain fierce, especially with major shopping events like Singles’ Day approaching.
ii. Alibaba’s Lazada Courts Luxury Brands to Fend Off Rivals
Alibaba’s Lazada is expanding its luxury segment to boost sales and compete against Southeast Asian rivals. Recently, Lazada executives met with over 100 Italian luxury brands, including Armani and Dolce & Gabbana, to attract them to LazMall Luxury. The goal is to capitalise on the region’s growing online market and achieve US$100 billion in e-commerce volume by 2030.
Takeaway: Lazada is prioritising profitability and brand positioning as it enters a new phase of e-commerce development.
2. Luxury and Retail
i. Rolex Kickstarts Pre-Owned Watch Sales Programme in China
Rolex has officially begun selling pre-owned watches in China, opening its first direct store in Shanghai. This store will sell both new and pre-owned Rolex watches and will handle watch buybacks. A shop in Hong Kong has already begun showcasing second-hand Rolexes both in-store and online. The new Shanghai location, operated by Bucherer, marks Rolex’s first direct retail presence in China, as the brand previously relied on dealers. Rolex’s Certified Pre-Owned program, launched in late 2022, allows customers to purchase certified pre-owned watches with a two-year global warranty.
Takeaway: Industry insiders believe that the brand’s acquisition of Bucherer in 2023 paved the way for Rolex’s strategic positioning in the Chinese market. Analysts believe that Rolex may accelerate the closure of existing dealer stores and instead open more brand direct stores under the Bucherer Group in the future. Under the direct sales model, the brands sold in the stores are expected to be limited to Rolex, Tudor, and Bucherer, with the likelihood of bundling sales primarily involving Bucherer.
ii. Arnault Family to Buy Key Interest in Paris FC
Bernard Arnault, head of LVMH, is close to acquiring a majority stake in Paris FC, partnering with Red Bull. The Arnault family will initially hold about 55% through their company, Agache, with plans to buy out the club’s chairman by 2027. Paris FC, the current leader of France’s Ligue 2, has ambitions to reach the top league and participate in the Champions League. It is expected to benefit from a budget of €100-200 million over several years.
Takeaway: This announcement coincides with LVMH’s recent venture into sports sponsorships. Just last week, the group finalised a 10-year agreement with Formula 1 valued at up to US$1 billion, taking over from Rolex. LVMH was also a key sponsor for the Olympic and Paralympic Games held in Paris this past summer. This move reflects a broader trend of luxury families entering sports, joining others like the Pinaults, who own Stade Rennais FC.
iii. Authentic Brands Group and Saks to Launch Luxury Joint Venture
Authentic Luxury Group (ALG) is a new joint venture between Authentic Brands Group and Saks Global. It aims to incubate luxury brand growth beyond fashion, exploring sectors like retail, hospitality, real estate, art, and travel. The first focus will be on revamping Barneys New York.
Takeaway: The joint venture is a win-win arrangement. For Saks, this means the retailer will engage with a wider array of brands and retailers within ALG. Saks Global has recently revealed plans to expand its presence with a $2.65 billion acquisition of Neiman Marcus, which includes Bergdorf Goodman. After this acquisition is finalised, Authentic intends to invest a minority stake in Saks Global. This initiative could serve as a protection as consumer interest in department stores continues to decline. Analysts believe this strategy may also help luxury brands navigate a slowing market and fierce competition. ALG’s cross-industry approach aligns with trends seen in other luxury conglomerates, which have also expanded into real estate and hospitality.
iv. China’s Bosideng Invests in Moose Knuckles
Bosideng International Holdings, a prominent Chinese down jacket manufacturer, has acquired over a 30% stake in Canadian luxury outerwear brand Moose Knuckles. This partnership aims to enhance Moose Knuckles’ global presence in the premium market. With backing from a consortium led by Cathay Capital, Moose Knuckles will accelerate its development as a key international player. Bosideng will provide both strategic and financial support to foster growth for both brands.
Takeaway: The move comes as Bosideng is transitioning into a high-end market.
v. Saudi Arabia’s PIF Acquires 40% of Selfridges’ Shares
Saudi Arabia’s Public Investment Fund (PIF) will acquire a 40% stake in the Selfridges department store chain after buying out Signa’s interest following Signa’s insolvency. Central Group, the remaining owner, will hold a 60% stake, and both parties will invest further to stabilise Selfridges financially. The PIF aims to enhance Selfridges’ position as a leading luxury retail destination.
Takeaway: This investment is part of a broader restructuring, as Central also takes control of other joint ventures previously linked to Signa.
vi. Watches of Switzerland Buys Popular Watch Platform Hodinkee
Watches of Switzerland Group (WOS) has acquired Hodinkee, a prominent online watch publication founded by Benjamin Clymer in 2008. The acquisition aims to strengthen Hodinkee’s position in the watch community while allowing it to operate independently under WOS. Clymer will return to lead Hodinkee but focus on content creation rather than retail.
Takeaway: This move is part of WOS’s strategy to expand its footprint in the US, following previous acquisitions of jewellery and watch retailers. The acquisition positions WOS to leverage Hodinkee’s expertise in horology while enhancing its presence in the luxury watch market.
3. Marketing and Advertising
i. TikTok Launches Automated Ad Targeting Feature
TikTok is enhancing its advertising capabilities with new automated options as the holiday season approaches. Key features include:
- Smart+ Ad Solution: This fully automated tool streamlines ad creation, placement, and bidding. Advertisers simply input assets, budget, and targeting goals. Early users have seen a 52% improvement in return on ad spend.
- GMV Max: Designed for TikTok Shop, this feature automates campaign creation and optimises traffic across various channels, significantly reducing setup time. It aims to boost overall sales through better exposure across shoppable placements.
- Privacy-Enhancing Technology (PETs): These integrations allow advertisers to access consumer insights without directly uploading audience data, ensuring privacy compliance.
- Conversion Lift Studies: This feature helps advertisers measure the impact and effectiveness of their campaigns.
Takeaway: These innovations reflect a broader trend toward automation in digital advertising. While some marketers may hesitate to rely on AI, the data indicates that these automated systems can enhance campaign performance.
ii. Meta Supports Video Ad Creators with Gen AI Tools
Meta is enhancing its generative AI capabilities for video ads in response to growing competition in the digital advertising space. Meta’s new tools will be incorporated into Ads Manager as part of the Advantage+ creative suite, which is set to launch early next year. New tools introduced include:
- Video Expansion Feature: Allows advertisers to adjust video aspect ratios, enhancing viewer experience.
- Image Animation Tool: Transforms static images into dynamic video content, catering to brands with limited video production resources.
Takeaway: Meta’s focus on generative AI tools is a strategic response to the video consumption trend. Over the past month, 15 million ads were created using these tools, resulting in an 11% higher click-through rate and 7.6% higher conversion rate compared to traditional ads. Meta has an advantage as their generative AI learns from social media interactions and emoji usage. However, the company still faces stiff competition from platforms like TikTok, which is advancing video generation more than Meta. For instance, TikTok’s Symphony tool enables marketers to upload product images and create videos with voiceovers based on prompts.
iii. Meta Rolls Out Updated Brand Safety Controls
Meta has also introduced new tools to enhance brand safety and control over ad placements on Facebook and Instagram. Key updates include:
- Comment Management: Brands can now deactivate comments on ads before they go live, offering greater control, especially during sensitive campaigns. However, this may raise concerns about perceived transparency.
- Ad Placement Control: Brands can block their ads from appearing on specific Instagram and Facebook profiles. This allows companies to avoid problematic associations and target their audience more effectively.
- Third-Party Block Lists: Meta is rolling out support for third-party created block lists, allowing brands that collaborate with Meta Business Partners to exclude unsuitable placements, thereby increasing brand safety.
- Brand Safety and Suitability Centre Update: This enhanced centre will streamline the management of ad placements, offering advertisers more control over their promotions.
Takeaway: These updates come in response to increasing concerns about misinformation and content safety on social media. As platforms evolve, the focus is shifting from engagement to controlled interactions, enabling brands to safeguard their reputation in a complex digital landscape.
iv. OpenAI Plans to Merge SearchGPT with ChatGPT by the End of 2024
OpenAI plans to integrate its SearchGPT prototype into ChatGPT by the end of 2024. This integration aims to drive significant traffic to publishers by attracting new audiences, though publishers will not receive direct ad revenue, only increased clicks. Varun Shetty, head of media partnerships at OpenAI, emphasised that the focus is on improving user experience by providing answers rather than just links. While AI-generated news isn’t favoured by audiences, generative AI can support journalists by enhancing content and facilitating story recommendations.
Takeaway: Although SearchGPT is gaining traction, it won’t rival Google’s dominance soon, but it does present an opportunity for SEO strategies to incorporate generative engine optimisation (GEO).
4. People Moves
i. Luxury: Pandora, Gucci and LVMH
Pandora: Berta de Pablos-Barbier, the CEO of Moët & Chandon (LVMH), was appointed as Pandora’s chief marketing officer (CMO). In her new role, she will enhance Pandora’s global visibility and reshape its consumer image as a premier jewellery brand. De Pablos-Barbier has held senior positions at Moët & Chandon, Lacoste, and Boucheron.
Gucci: Gucci made two C-level appointments.
- Stefano Cantino was appointed CEO of Gucci and will replace Jean-François Palus. Cantino, who has over 20 years of experience, has served at Prada and Louis Vuitton. At Louis Vuitton, he significantly contributed to the brand’s growth. Cantino is expected to leverage his expertise to combine Gucci’s heritage with strong fashion elements.
- Cayetano Fabry was appointed the chief commercial officer (CCO). Fabry previously served as president for the EMEA region at Saint Laurent, which is also part of the Kering group. He has worked at LVMH for 16 years in various operational and management roles across Europe and South America.
This leadership change coincides with Gucci’s strategic reorganisation and revitalisation efforts. Recent appointments also include Davide Buzzoni as global communications director and Stefano Cantino as deputy general manager.
LVMH: Thibo Denis, the creative force behind Dior Homme’s successful footwear line, is transitioning to Pharrell Williams’ Louis Vuitton. He confirmed his move on September 11, having started work a week earlier. Denis is credited with creating iconic designs like the B23 sneakers and popular collaborations like Dior’s Birkenstocks and Air Dior Jordan sneakers. At Louis Vuitton, he will join Mathias Patillon in further strengthening the brand’s footwear design team under Pharrell’s influence.
ii. Consumer Goods: Unilever and Revlon
Unilever: Unilever appointed Mary Carmen Gasco-Buisson as CEO of its prestige division, effective November 1. She replaces Vasiliki Petrou, who led the division for 10 years before leaving in July. Gasco-Buisson, who has over two decades of experience, previously worked at Unilever as the worldwide brand leader for mass brands Axe and Lynx from 2020 to 2022. She also held leadership roles at Pandora and P&G. The prestige division was established in 2014 and comprises 10 premium beauty brands, including Dermalogica and Hourglass.
Revlon: Revlon appointed Michelle Peluso as its new CEO. Peluso previously served as the chief customer and experience officer at CVS Health. Her appointment follows Revlon’s emergence from bankruptcy, which reduced its debt significantly and restructured its ownership. Interim CEO Liz Smith, who led the company through this transition, will remain on the board as executive chair. Despite challenges with the Revlon brand, the company saw a 5% sales increase in 2023, largely due to the strong performance of Elizabeth Arden in Asia.
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Image Credits:
- South China Morning Post
- Ad Targeting