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RETAILPERFORMANCE

ASIA

Luxury Brands& Digital Adoption

Where will Chinese tourists buy

this fall winter?

Copyright © 2016 ACDL All rights reserved

Consumer insights:Luxury in-store

benchmark study

LUXURY MARKET IN CHINA :

Satisfying sophisticatedand always connected

clients

Retail Performance Asia │ 2016 edition │ Texts & Analysis copyright © ACDL International 2016 3

CONTENTLuxury Brands & Digital Adoption : The Pursuit Of A Seamless ExperienceAuCoeurDuLuxe Case studiesWhere will Chinese tourists buy this fall/winter?Consumer insights: Luxury in-store benchmark studyHappening Now AuCoeurDuLuxe Surveys AuCoeurDuLuxe Publications

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Magazine Details: RETAIL PERFORMANCE ASIA Issue #5- 2016Copyright (c) AuCoeurDuLuxe International. All rights reserved

MAGAZINE CONTRIBUTORS EDITORSChief Editor : Laurence Ouaknine, President of AuCoeurDuLuxeAuCoeurDuLuxe Team : Christele Disser, Alexia Medlock, Rong Rong ZhangArt Director : Clara Choi Picture sources : ACDL source, Shutterstock, 123rf

CONTACT DETAILS E: [email protected]: www.acdluxe.com

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from the EditorAfter the 2015 luxury market slowdown and in light of the latest market trends in Asia – e.g. Korean beauty brands booming, millennial’s’ sophisticated expectations and the mandatory digital integration - 2016 was likely to be rich in challenges. Without doubt, this forecast turned out to be true and was amplified by diverse social and economic factors multiple terrorist attacks, Chinese travelers’ new favorite destinations and the unexpected Brexit vote. These factors characterized 2016 and did not alleviate the luxury market. In this evolving and difficult market environment, to maintain their level of sales, luxury brands strived to uplift their shopping experience. Offering a seamless and unique experience in-store was their common goal. To achieve it, diverse actions have been carried out. More and more brands offer ‘Click and Collect’ option, and they also work on improving their CRM services but also enhance their staff’s career path with new and adapted training content. Today, eLearning stands as an alternative training solution that enables brands to transfer knowledge in a short amount of time to a large number of staff with self-paced learning.AuCoeurDuLuxe, as a leading training group in Asia, does not only support luxury brands in building learning and development programs but also helps luxury brands to build online content to their existing training. This year, the AuCoeurDuLuxe team is proud to have delivered 50 eLearning modules and 2500 trainings.

In this edition of Retail Performance Asia, AuCoeurDuLuxe addresses the current trends of the luxury market and the main events that have impacted it. By leveraging our knowledge in retail, we explore solutions to improve the shopping experience and shrink the gap between shoppers’ expectations and their current experience in-store.

Laurence Ouaknine

4 Retail Performance Asia │ 2016 edition │ Texts & Analysis copyright © ACDL International 2016

Luxury Brands & Digital Adoption:

The Pursuit Of A Seamless Shopping Experience


LUXURY BRANDS & DIGITAL ADOPTION

6 Retail Performance Asia │ 2016 edition │ Texts & Analysis copyright © ACDL International 2016 Retail Performance Asia │ 2016 edition │ Texts & Analysis copyright © ACDL International 2016 7

“ For Chinese Consumers, Before Making Luxury Purchases, They Would Be Influenced By An Average Of 13 Different Touch Points, Including 7 Online Touch Points.2”

INTRODUCTIONWith a second year of contracted growth for luxury sales in Mainland China, luxury brands are eager to seek a way out of the woods. Adoption of digital is believed to be one of the new sources of growth due to the transformation of how, when and where the consumer can purchase luxury goods. Although still dominant, China’s store-based luxury retailing has been continuously losing share to internet retailing, which grew 20% in 2015 and reached 5% of the total market share, outpacing the overall market by nearly three times. Besides e-tailing, digital touch points such as social media and mobile have embedded into the shopping journey, especially for tech-savvy Chinese luxury consumers – Generations Y and Z1. These always-connected groups rely heavily on the internet to do product research and make purchases. According to a study, 3 out of 4 luxury purchases are influenced by what consumers see online2. Well-informed and always looking for updated and personalized information, Chinese consumers have high expectations about their digital experience with brands across every touch point.

As brands have clearly realized the importance of a digital presence and a seamless Omni-channel experience, they are eyeing the digital wave with an increasing marketing budget. However, do their efforts really live up to the expectations of consumers? Willing to provide an insightful answer, ACDL launched a gap assessment of the digital competencies of 100+ luxury brands’ operating in Mainland China (see Exhibit 1).

1 Generation Y is commonly defined with birth years from 1980-1990. Generation Z is mostly defined with birth years after 1990.2 McKinsey, 2015 “Digital Luxury Experience Observatory”


Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experience*Multi-brands: Refers to brands with various business categories such as ready-to-wear, watch & jewelry and cosmetics etc.

Exhibit 1 - Survey Methodology

WINTER 2015 - SPRING 2016

GLOSSARY

1. Website2. M-Site3. Ecommerce4. Mcommerce5. Weibo6. Wechat

E-tailingOnline commerce including selling on mobile site & mobile app.

M-siteMobile optimized brand official website.

McommerceBrand-operated mobile-optimized commerce site. Excluding third party platforms (e.g. Amazon, Taobao).

WeiboChina-based microblog, one of the most popular social media sites in Mainland China.

WechatOne of the largest standalone mobile text and voice messaging app in Mainland China, by monthly active users.

O2OOnline-to-offline commerce that draw customers from online channels to physical stores.

In Total 108 Luxury Brands

Mainland China Market

Ready-To-Wear(30 Brands)

Multi-Brands*(16 Brands)

Cosmetics & Fragrance

(32 Brands)

Watch & Jewelry

(30 Brands)

SURVEY OBJECTIVES

Recommend luxury brands on how to take advantage of digital trends.

Identify the best practices,

Provide a big picture of the digital market of luxury brands in Mainland China,

01

02

03

Conventionally, luxury brands were quite reluctant towards digital adoption. However, in terms of digital presence, the tested luxury brands in our study were remarkably proactive. 60% of them had presence in five or more digital touch points. As we can expect, all tested brands had official websites. Nevertheless, some brands still need to adapt their official websites to provide the local language - only 65% of tested brands had a full website version in Chinese. Social media was well established with a majority of brands (94%) managing an official Weibo account and a WeChat account (89%). E-tailing capability (including mobile commerce) and mobile apps were relatively lagging behind (see Exhibit 2).

When breaking down to category-level, Multi-brand and Cosmetics & Fragrance were particularly dedicated to developing digital competencies– respectively 75% and 72% of the brands within the category presented at least five digital touch points (see Exhibit 3).

1. COMMENDABLE PRESENCE OF LUXURY BRANDS ON DIGITAL LANDSCAPE

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceQuestion: Does the brand have presence on the following digital touch points?

Exhibit 2 - Luxury brand presence in digital

42%

37%Etailing

Mobile App

100%

Official website

94%

Weibo

89%Wechat 84%

OptimizedMsite


Multi-BrandsCosmetics & FragranceReady-To-WearWatch & Jewelry

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceAverage score on each touch point by category

Exhibit 4 – Overall performance on each touch point by category

Your approach must be inherently mobile, with the goal of becoming part of their (Generation Z in China) digital lifestyle. This means offering engaging, meaningful and inspirational content as well as distinct experiences.3”

3 RTG Consulting, 2016 “China Generation Z”

Compared to other categories, Watch & Jewelry brands in general were more reluctant in dipping their toes into digital waters – e.g. only 7% of the tested Watch & Jewelry brands offered online shopping options. However, the brand website often impressed its viewers with editorial content highlighting the brand’s heritage and values – 90% of tested Watch & Jewelry brands featured brand history with a strong focus on their craftsmanship.

Editorial content is one of the best opportunities to allow consumers to “enter into the world of the brand”, and inspiring content helps to build customer engagement and enhance brand loyalty. In a study of China’s Generation Z3, the future main purchasing force of luxury goods, the young segment is expecting brands to “build genuine human connections” rather than simply sell products. It is evident that Chinese consumers are gradually seeing luxury not only as material goods but increasingly as an experience and lifestyle.

Weibo

WeChat

Office Website

EcommerceMobile

Commerce

Mobile App

Mobile Site

“

Exhibit 6 – General impression towards mobile site

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experience

“ Do you feel you have had a luxurious mobile site experience?”

27% 23%

50%Average

To Step Up Their Game In Mainland China, Brands Still Need To Develop Capabilities In Mobile Touch Points.

Exhibit 7 - Brands’ digital competencies on mobile touch points

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceQuestion: Does the brand have a mobile app/optimized mobile site/in-app shop?

84%

33%

23%

Mobile site only

37%

E-shop in Mobile App

Mobile App only

Mobile site & App

China is a “mobile-first” country when it comes to digital access, particularly for Generations Y & Z who practically live and breathe mobile technology. A study revealed that in 2015, 45% of China’s luxury shoppers buy over half of their luxury goods online, and mobile is the most commonly used device for daily retail visits4. At the same time, the on-the-go Chinese consumers are also looking for entertaining content and user-friendly designs on the mobile screen. However, according to our study, when it comes to mobile-optimized experiences, brands’ insufficiencies lay bare.

For the luxury brands we tested, mobile experience was mostly interpreted as “average” in terms of luxurious feeling. 23% of respondents rated the experience as “not at all” luxurious while only 27% of them were satisfied (see Exhibit 6). Reasons were commonly related to mobile-optimized user experience – e.g. mobile site did not fit onto device screen, hard to find information, insufficient store locator, etc. Apart from M-site, mobile apps also highlighted the front runner in the digital competition. Overall, about 37% of the tested brands had mobile apps, which were mostly used for keeping customers updated – new arrivals, offers, and brand/company events. We have seen some brands driving customer foot traffic from online to offline by offering mobile coupons that can only be redeemed in brick-and-mortars. For the click-and-buy consumers, most brands are not ready to offer an in-app shopping option as yet - 23% of the apps embedded e-shops.

3. MOBILE EXPERIENCE TO BE ELEVATED


eMAG features Fashion, Sports, Art and Design

sections.

Chanel News updated regularly showing the brand/company latest news, as well as industry trends and fashion show display

Tips on how to mix & match sneakers

Exhibit 5 – Case study HUGO BOSS & CHANEL Editorials on WeChat

4 Luxury Society, 2015 “Are you reaching the global Chinese luxury consumers?”


Cosmetics & Fragrance had the best balance of digital capabilities across the touch points, and figured most prominently in e-tailing (including mobile commerce) and WeChat account management. Multi-brands was outstanding in telling full brand stories and editorial content, especially via WeChat. Watch & Jewelry, as we expected, was most reluctant in embracing digital and E-tailing (see Exhibit 4). Besides wide adoption of E-tailing, beauty brands were comparatively more present in social media, pioneering optimization of WeChat’s unique features such as one-to-one customer service, in-app online shopping, and loyalty program management (see detailed analysis in Finding 5). To Chinese consumers, WeChat is more than a messaging app. The rich potential of the platform’s vast functionality and its large user base make it an essential key touch point that luxury brands need to pay attention to. For Multi-brands, the focus was more on brand story-telling through rich visual and editorial content on their websites and WeChat. On one hand, multi-brands’ websites created truly positive impressions and were described as “beautiful”, “personalized” and “engaging”. On the other hand, 24% of their WeChat accounts dedicated a section on the homepage for the brand’s E-magazine, compared with 4% to 9% for other categories. For instance, the e-magazine of HUGO BOSS – eMAG featured content ranging from fashion news, art and design to mix & match tips. Chanel also kept its followers updated with its Chanel News (see Exhibit 5).

2. DIFFERENT APPROACH AND MATURITY PER CATEGORY

Slowly But Surely, Luxury Brands Are Catching Up With The Digital Wave And Are Shifting Their Approach To Interact With Consumers Online And Create Engagement.

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceAverage score on each touch point by category

Exhibit 3 – Category breakdown Brand presence with 5+ digital touch points

47%Ready-To-Wear (30 Brands)

75%Multi-Brands* (16 Brands)

72%Cosmetics & Fragrance (32 Brands)

53%Watch & Jewelry (30 Brands)


Ecommerce remains as a weak spot across categories except for Cosmetics & Fragrance. 41% of the tested brands had self-operated Ecommerce sites5, among which, the Watch &Jewelry category is significantly falling behind (see Exhibit 8).

Besides the basic elements of an Ecommerce site such as product display and shipping options, we specifically evaluated the localization of payment methods, as Chinese consumers are more used to local payments such as Unionpay6. Mobile pay is also rapidly gaining wider acceptance among tech-savvy consumers. Across brands, Alipay and Unionpay were the two most commonly adopted local payment methods – 69% offered Alipay, 64% Unionpay, while 47% offered VISA/MasterCard etc. In addition, some brands also accepted WeChat pay and other Chinese local payment methods. Although 96% of the tested brands gave reassuring information constantly during the shopping process, including FAQ on payment & delivery, refund policy and customer support via hotline, some customers were not entirely assured. About half of them felt the online experience could be more seamless and reassuring. An interesting finding drew our attention: when brands provide real-time assistance such as Live Chat, the overall impression of the shopping experience was dramatically elevated – among those brands offering a personalized consultation service via live chat, 90% of them managed to put customers at ease (see Exhibit 9). Those brands winning over customers performed strongly in providing easy check-out, constant reassuring information and customer support (hotline & online chatting) throughout the online shopping experience.

4. ECOMMERCE STILL A WEAK SPOT EXCEPT FOR COSMETICS

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceQuestion: Did you find the online buying process seamless & reassuring?

Exhibit 8 – E-tailing penetration by category


“ I am quite happy to have a luxurious online experience...it has personalized service such as online consultation. I can ask questions and a

personal consultant answers instantly and provides recommerndation for me.”

Exhibit 9 – Reassuring - customer support via Live Chat vs. Hotline

Multi-BrandsCosmetics & Fragrance

Ready-To-Wear

Watch & Jewelry

66%

50%

44%

7%

“ Does the brand have a self-operated online shopping website ? ”

90%32%

Featured Live ChatOnly Hotline

Rated as Good/Impressive in reassuring experience

5 Data includes brand-operated commerce site on PC. It does not include Ecommerce site operated by the third party such as Amazon, and mobile commerce site.6 Alipay and Unionpay are the two most adopted local payment methods in Mainland China.

Exhibit 12 – Case Study - Clarins’ WeChat Account

Clarins Membership Club – A separate WeChat account that enhance customer loyalty by establishing personalized relationship with customers. One-to-one consultation is available – questions are answered immediately after sending.

O2O initiatives include in-store consultation reservation and samples collections.

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceQuestion: What can be found on brand’s homepage?

The Internet and smartphones not only gear Chinese luxury consumers to go online, but also empower them to express their own words towards fashion, anytime and anywhere. Without a doubt, social media is playing an increasingly critical role throughout the luxury shopping journey. As one of the most influential social media platforms in China, Weibo still dominated in the number of brands in which it has presence (94% of tested brands, see Exhibit 2) but WeChat is quickly catching up (84%) and with a rising influence in engaging consumers (see Exhibit 10). WeChat provides a more private but tailored interaction impression. As a result, consumers tend to be more interested in subscribing to WeChat than to Weibo.

The industry has clearly realized the importance of Wechat in winning over customers. However, the majority of brands are not taking full advantage of it, especially the WeChat-only features, such as in-app E-shop, loyalty programs management, one-to-one customer service, etc. For most brands, WeChat accounts were used for product and brand information display. We found 72% of the brands featured an “About the Brand” section on homepages, and over half included their latest collection/whole series. Geolocation service was also a must-have function, with 80% of the brands offering an in-app store locator (see Exhibit 11). To be well ahead of their rivals, brands are urged to develop differentiated capabilities such as a loyalty program (28% of the brands), O2O promotions (e.g. reserve in-store service via WeChat), in-app customer service and e-shop. Even so, we noticed several avant-garde brands proactively developing

5. WEIBO’S PRESENCE VS. WECHAT’S ENGAGEMENT

Exhibit 11 – Features on WeChat homepage

Reference: AuCoeurDuLuxe, Luxury brands & Digital adoption: the pursuit of a seamless shopping experienceQuestion: What can be found on brand’s homepage?

Exhibit 10 – Engagement- WeChat vs. Weibo


BASIC COMPETENCIES

Store locator 80% Membership management 28%

About the brand 72% Brand/Company news 28%

Latest collection 66%Reservation service 16%Whole series 52%

eCommerce 9%Link to official website 43%

eMagazine 9%Star Product 41%

DIFFERENTIATORS

“ After visiting the social media account are you more interested in subscribing?”

61% 36%

WEIBOWECHAT

WeChat competencies. On Clarins’ WeChat homepage, the brand embedded links that directed users to the Mcommerce site. The beauty brand also made a big play in loyalty programs by operating a separate WeChat account for membership management (see Exhibit 12). It featured membership management, live chat customer service, members-only deals, and online to offline initiatives (e.g. samples to pick up in physical stores).



Although they display a wide presence on digital touch points, brands have not fully met customers’ expectations of a seamless online experience across these touch points. With 81% of the tested brands linking their website with social media platforms, a much lower percentage link social media back to the official website. For instance, on their WeChat homepages, only 43% of the brands have links to their official websites. Even fewer brands attempt to direct customers to e-tailing channels (9%). Although Watch & Jewelry is relatively less mature in digital competencies, Mont Blanc has set the bar high for its peer competitors and other luxury categories. The brand is the vanguard not only in digital presence but also Omni-channel integration. Mont Blanc was outstanding in optimization of the favorite Chinese channel – mobile. The brand has a well-adapted mobile site featuring an e-shop and mobile apps. Mont Blanc proactively tries to provide a seamless connection across touch points. Consumers can access the Mcommerce site via the brand’s WeChat account.

6. A LACK OF SEAMLESS OMNI-CHANNEL INTEGRATION TO WOW CONSUMERS

Social media accounts can be found on the official website and m-site. Online-to-offline efforts were also commendable. For instance, followers can reserve boutique appointment on Mont Blanc’s WeChat account. The brand’s website also allows customers to view stock availability based on location (see Exhibit 13).

Besides making efforts in connecting different touch points for customers to “shop anywhere and anytime”, offering a sensory experience consistent with Brick-and mortars could also help brands stand out. In the efforts of driving foot traffic from online to offline, brands also need to offer a consistent in-store luxurious shopping experience to retain the customer.


Exhibit 13 – Case Study Mont Blanc Omni-Channel Integration

Mont BlancWeChat Account

Mont BlancWebsite

Local payment

Live Chatcustomer support

WeChat Store

OfficialMcommerce site

QR code forbrand’s WeChat

account

Link to SocialMedia & Mobile

App

Location-basedstore locator

Omni-reach link to M-commerce

020: Boutique appointment reservation

Editorial workshop about watch craftsmanship

Omni-reach:• Social media:

Youku & Douban

• E-commerce• Limited edition

information

Customer service

Store location information

Omni-reachView invertory online of the closest store

Omni reach to social mediaWeibo, Youku, Douban

Editional emphasis on craftsmanship & heritage with engaging stories

Hotline & store locator on top of the navigation bar

Editional emphasis

Omni reach to social media

Mobile appfocus on 020 (scan QR codes for promotion, new arrivals, etc.)

Omni reachsocial media & mobile app

Personalization link-sell

Local payment:Alipay

Delivery option:customized shipping date based on shoppers’ convenience

Perfect duplicate of PC website with mobile-optimized features

Omni reach social media (WeChat) & mobile app

Hotline & Store locator on top of the navigation barPersonalization: link-sell

Wechat Weibo Website M-site Ecommerce Mcommerce



Digital enables brands to directly interact with current and potential customers. It embodies a wide range of business opportunities for the coming years. According to a report by KPMG, “half of China’s domestic luxury consumption will be generated online by 2020”. Hence, new technologies are a reality that luxury brands have to deal with. Integrating their offline and online sales channels and designing the best support to connect with customers through digital technology is essential to generate engagement and loyalty.Based on ACDL’s study, we identified key strategies to enhance brands’ digital competencies and drive sales in China. In summary, these are:

• Brands should widen their digital presence, yet strategically leverage the primary functions of each touch point. We suggest brands firstly develop E-tailing capabilities in order to catch up with the “always-on” Chinese luxury consumers, and provide them with a smooth and reassuring shopping experience. Enhance user-friendly functions and emphasize driving foot traffic to physical stores in Mobile-site and Mobile commerce. Utilize brand website as the main touch point to tell a complete brand story. Last but not least, harness the power of social media - Weibo and WeChat - as key channels to engage consumers and enhance brand loyalty.

RECOMMENDATIONS:

All Key Players Know Omni-Channel Experience And Operations Are Where Retail (Not Only Limited To Luxury) Is Heading.Brands Are Suggested To Quickly Bridge The Gap Between Online And In-Store Experience.

• Nowadays, the sophisticated Chinese consumer expects more in regards to emotional factors such as feeling like a VIP and immersing themselves into the world of the brand. To attract and retain them, brands need to highlight the human factor - editorial content with strong brand identity, lifestyle focus, personalization in both product and service, in store and online.

• In addition to optimizing individual touch points, brands also need to integrate various touch points to realize a smooth Omni-channel experience. Linking consumers seamlessly to the brand’s offline channels, no matter if it is the e-tailing site or WeChat account, may avoid diluting the luxury image and enable brands to supervise the kind of messages it communicates with customers.

AuCoeurDuLuxe is French for the “heart of luxury” and is what we believe is at the core of luxury business. Nothing epitomizes the industry’s spirit and essence more than the human factor, whether it is the relationship between the consumer and the brand, or the relationship between the brand and its ambassador. The drive to exceed client expectations is synonymous across luxury brands, therefore leveraging these relationships and empowering people holds the key to success.

By leveraging every area of our retail expertise, we identify actionable insights, craft and implement tailored solutions with meaningful impact on sales, customer experience and front line staff retention. Our 360 degree approach is based on 4 key steps: Analyze, Recommend, Design and Implement. We listen to you to understand your business and your objectives. We are specialized in end-to-end human resource solutions and mastery of service in the retail environment from assessment of

2016 ACHIEVEMENTS

+2 500TRAINING PROGRAMS

DELIVERED

+14 000SURVEYS AND INTERVIEWS

CONDUCTED

+40 000RETAIL

PROFESSIONALS TRAINED

• Mystery Shopping• Omni-channel• Focus group• Qualitative interview• In-store checking• Employee survey

• Training content• eLearning platform• Bonus schemes

• Employ local trainers & certified coaches specialized in your field

ANALYZEthe performance of your

store network

DESIGNactionable programs to drive

your improvement

IMPLEMENTyour solutions through

training & coaching

RECOMMENDpersonalized solutions for your

retail needs

MODEL FOR RETAIL EXCELLENCE

ARDI

• Training solutions• Human resource strategy

all factors that impact the customer’s experience, to the design and implementation of training solutions. We ensure to provide the best, most professional local services with international standards. Based in Paris, Hong Kong, Shanghai and Singapore, AuCoeurDuLuxe has subsidiaries across Asia Pacific and Europe. Our local offices are critical to ensure a worldwide approach with seamless control of our operations locally along with our clients’ subsidiaries.

“ACDL helped us to reshape our training materials and make them more relevant and practical for our staff to learn from. The training they provided on this new basis was truly

inspiring and appreciated by our sales force.” Qeelin, Artaux Christophe, CEO

AUCOEURDULUXE LUXURY BRANDS & DIGITAL ADOPTION


CASE STUDIES

CASE STUDYEnhancing Service And Selling Capabilities Through Shopping Experience Assessments

CASE STUDYFinding The Right Talents Through A High Quality Recruitment

BACKGROUNDA leading group in Premium Spirits industry was interested in knowing their performance in selective stores and duty free airports in Asia Pacific. The group needed to build a comprehensive regional assessment program to improve the sale service by evaluating the staff’s ability to sell and share their product knowledge to different client groups.

SOLUTION & APPROACHUnderstanding the Wines and Spirits group’s values and strategic key elements to assess, ACDL designed and conducted a customized Mystery Shopping Program in duty free airports & downtown locations in Asia Pacific Region. Successfully deployed in 9 countries and based on hundreds of evaluation, ACDL delivered detailed analysis with recommendations to maintain excellent skills in service and selling in each store, country and at a regional level.

THE RESULTFor 2 years, ACDL has closely worked with this worldwide leading group to provide insightful analysis highlighting key strengths and areas of improvement in service and selling capabilities. To fulfill the client’s needs and truly improve consumer experience, ACDL developed e-learning modules on product knowledge and features to continuously upgrade selling techniques by keeping staff informed on story-telling and product specifications.

BACKGROUNDA worldwide skincare brand, known for its unique products, claims to give access to a timeless beauty. Looking for trainers highly specialized in skincare, the brand required specialists able to provide and manage their beauty advisors in a very short time, capable to deliver the brand’s training and ensure BA’s coaching in-store. Training needs were identified but the brand was facing a lack of headcount in Hong Kong and Mainland China, and was trying to find alternative solutions and outsource their trainers.

SOLUTION & APPROACHThe challenge lied in immediately providing right operational talents specialized in Skincare who could become perfect brand ambassadors. In taking responsibility for HR consulting, training and coaching, ACDL tailored a staff selection process in line with the skincare brand’s values and needs. By assessing talents’ sales skills and company knowledge, ACDL selected ideal recruits that would be fully dedicated to this partnership and able to fulfill the expectations of the brand.

THE RESULTACDL elaborated a flexible, turnkey and cost effective solution thanks to its expertise in the luxury industry and its knowledge of the skincare market due to a diversified client portfolio. ACDL internally manages trainers: conducts recruitment, ensures trainings and the daily follow-up. The recruitment framework was deployed globally to perfectly answer the brand’s evolving needs around the world. ACDL has now 4 trainers fully dedicated to this brand. This solution offers a short-lead time and limits legal risks in different countries.

CASE STUDY Reinforcing Sales Capabilities By Elaborating A New Selling Ceremony

BACKGROUNDA luxury Watch and Jewelry brand, famous for combining unparalleled craftsmanship, technical process and innovation, identified the need to strengthen its sales techniques for one precise collection towards a specific target: brides & grooms. Willing to collaborate with an external consulting agency, exposed to different brand strategies and experts in their market, the brand was willing to launch a specific program, aiming to elaborate a new training content and a unique selling ceremony in Hong Kong to assist clients during their first purchase and finally arouse brand loyalty.

SOLUTION & APPROACHAs weddings are usually the life event of the very first jewelry purchase, brides and grooms embody a strategic opportunity for the brand to build loyalty. By taking inspiration from the brand’s culture and its competitive landscape, ACDL developed and conducted a qualitative study in brand’s boutiques and competitors’ stores. This survey included a Mystery Shopping Program to assess the current selling techniques combined with qualitative interviews led with high end Mystery shoppers. This evaluation pointed out the weaknesses and skills to address to reinvent the shopping experience. From these conclusions, ACDL elaborated a complete selling ceremony dedicated to the specific brand’s collection and its target clientele.

THE RESULTACDL proceeded to a train the trainer session with the training manager of the brand, who delivers this customized training to its sales advisors. Finally, within its tailored approach, ACDL’s participated to transform the shopping experience into a unique moment.


WHERE WILL CHINESE TOURISTS BUY THIS FALL WINTER?

For luxury brands, capturing Chinese tourists is crucial as they stand as the very first source of cross-border travel spending in the world. Last year, the number of outbound Chinese tourists climbed to 120 million and is expected to reach 133 million in 2016. According to the consulting firm Bain & Company, mainland Chinese account for 31% of global luxury sales and 80% of their purchases take place abroad - from overseas trips and overseas websites. Last May, their foreign spending achieved a year-on-year increase of 25%, reaching US$292 billion. Chinese tourists’ overseas spending ranks first in the world. However, their habits in acquiring luxury goods are shifting. Luxury brands need to track these change to adapt their strategy and properly answer their evolving expectations. Different reasons explained why Chinese tourists’ change their way of spending.

CULTURAL EXPERIENCE OVER SHOPPING EXPERIENCEEnjoying a cultural experience is an influential factor in their destination decision-making. As a consequence, cities like Hong Kong that provide amazing shopping experiences but had not yet developed new cultural initiatives towards tourism are losing their appeal. Usually known as one of the top destinations for mainland shoppers, Hong Kong witnessed a decline in Chinese tourists’ arrival since 2016. To satisfy their desire of discovering new

cultures and experiencing new activities, Chinese travelers expand their horizons more than ever. They travel more and more to South Korea - the number of Chinese tourists is expected to grow by 28% in 2016 as South Korea appealed for its relatively cheap luxury goods. In Japan, providing new cultural experiences and diversifying their initiatives for consumers impact positively tourism - Chinese tourists are expected to increase by 46.2% in 2016. Europe and Australia remain among the top destinations as they are popular shopping destinations but also strive to offer cultural activities.

UK LEAVING THE EUBrexit’s effect on Chinese tourists’ choice of destinations remains unclear. On one hand, the plunge of the pound may encourage Chinese travelers to flock to London really soon and take advantage of the attractive exchange rate. On the other hand, travelling halfway around the world because of a plummeting pound may not be as appealing as it sounds since London remains one of the most expensive places for tourists in the world (hotels, F&B…) which would offset the savings for tourists.

Where Will Chinese Tourists

Buy ThisFall Winter?

E-RETAILERS BOOMINGIn China, cross-border ecommerce outperforms bricks-and-mortar shops. Online market is facing a surging demand for luxury goods resulted from better prices, better perceived quality and a wider range of choice compared with local retailers. Digital shopping in China grew by more than 70% in 2015 and 40% of China’s online consumers buy foreign goods according to eMarketer, a digital marketing researcher. To boost the domestic market, the Chinese government keeps trying to introduce new regulations to encourage luxury shoppers to make their luxury shopping at home rather than abroad. Last April, the government introduced new fees on personal overseas orders which generated the first week a fall of more than 60% of cross-border e-commerce orders for pilot zones (Shenzhen, Zhengzhou, Ningbo and Hangzhou). This new import tax regulation has been postponed to next year, giving ecommerce retailers time to adapt their strategy to Chinese market.

MILLENNIALS RESHAPE THE LANDSCAPE OF LUXURYAccording to GFK, Generation Y represents 73% of outbound Chinese tourists. More sophisticated and looking for new adventures, they purchase luxury goods not only for acquiring a product but also to live an aspirational experience. Well-informed and tech-savvy, this new generation has high demands that luxury brands must include in their brand strategy.

The notable change in where and how Chinese tourists purchase luxury goods is still evolving. We witnessed a shift of power between regions but cannot undoubtedly establish what the next top destinations will be. In the race to win over Chinese travelers, 2016 is a pivotal year for luxury brands. They will have to rethink their strategy to simultaneously capture Chinese shoppers abroad, online and at home.


ABOUT THE STUDYACDL has led a three year study from 2014 to 2016 of China consumers, evaluating whether their expectations are being satisfied in luxury boutiques, while their shopping tastes and behaviors have truly changed during the past few years. The study included more than 1500 qualified participants who were asked about their subjective impression of their visit in luxury Fashion & Accessories, Watch and Jewelry and high-end Cosmetics boutiques. Across the three years, participants were given the same set of questions for each key component of the luxury shopping experience. They provided an answer

Consumer Insights: Luxury in-store benchmark study

from five choices: 0% = unacceptable to 100% = impressive and qualitative comments. We have combined these results to provide a benchmark analysis across the three year period.In this report, we highlight enduring concerns that surround the luxury store front in China and based on our professional expertise in the market, we offer a set of solutions to address the luxury retail performance.

Chinese shoppers represent nearlyof the global luxury market

Chinese shoppers’ opinions regarding the shopping experience 2014-2016

50%

+15%

BENCHMARK RESULTSChinese shoppers, who nearly represent 50% of the global luxury market, purchase luxury goods more and more frequently. Despite a slowdown last year, their spending on luxury goods witnessed a rebound in 2016, partly attributed to a new breed of middle-class shoppers, according to a study by Goldman Sachs1. Chinese shoppers therefore embody an essential opportunity for luxury brands in every segment. However, brands have to keep up on their purchasing behavior as their tastes keep evolving and so do their expectations. More sophisticated and demanding, they want brands to provide them with great service, an appealing store environment and a unique product selection. Shopping is not just about purchasing anymore, it is about living an experience. Our benchmark highlighted that during the past three years, luxury brands strived to satisfy these new expectations by rethinking their in-store experience. Heading in the right direction, Chinese shoppers’ opinions of their in-store visits were on the rise over the three years, yet some areas still need further progresses.

From 2014 to 2016, respondents’ opinions regarding the shopping experience followed an upward trend: overall subjective rating grew by 15% and so did the willingness to buy (+16%) and to refer (+9%). This improvement resulted from actions undertaken by brands to satisfy shoppers’ new expectations but also to enhance staff capabilities of serving. This feeling was most dominant for respondents who visited Fashion & Accessories brands. Across the three years, the main improvements noted during the discovery process were when SA try to understand shopper’s needs (+15%) and during the product trial (+18%). While the customer service consciousness seemed to show signs of improvement, certain service competencies still fell short of meeting customers’ expectations. Firstly, brands could take

CONSUMER INSIGHTS: LUXURY IN-STORE BENCHMARK STUDY

further steps by making the shoppers feel valued, but they could also make efforts in convincing them about the brand & product benefits. To do so, SAs’ communication skills (i.e. product knowledge, brand story) could be strengthened.

Making shoppers feel unique involves many steps of the shopping experience. On one hand, to stand out in the eyes of Chinese shoppers, luxury brands have to treat each client as a VIP by building a professional but personalized relationship. From the very beginning of the visit to the farewell process, diverse techniques enable staff to build a rapport with shoppers and finally develop loyalty. On the other hand, feeling special is not enough to fully satisfy Chinese shoppers’ expectations anymore. Today, the shopping experience must also be an immersive and convincing brand experience.

MAKING SHOPPERS FEEL VALUED & SPECIAL…… with warm and friendly greetingsA warm and passionate welcome can set the tone of the rest of the visit and positively impacts the evaluation of the overall experience.

“ The SA greeted me proactively, and showed a professional attitude throughout the visit...I am quite impressed by the detailed service. Overall, the SA was passionate and professional, the conversation was pleasant.”From our study, we can clearly see a rising trend in greeting proactivity (+11%), but brands could go steps further to make the first impression more unique. Personalizing the greeting with name recognition – SA self-introduction and address clients by their preferred name – might help to build a closer relationship with clients. Yet, until this year, only small efforts were made in name recognition. Some of the respondents of our survey indicated that name recognition managed to make them “feel like asking for advice from a friend”, and eased the pressure of buying. Another way of creating a warm atmosphere and comfortable setting is to offer a seat and drinks before the consultation, yet it was not prevalent among the brands we evaluated.

… by understanding shoppers’ needs and introducing relevant productsVisiting bricks-and-mortar is not simply for the products, it is also for having a professional consultation, getting personalized advice and enjoying a true human interaction. On one hand,

1 Inside Retail Hong Kong, “2016: Crunch year for China Luxury Retail”, Feb 2016



shoppers expect their specific needs to be listened to and well understood. On the other hand, it also provides the right opportunity for the SA to assess additional needs and attempt to up-sell and/or cross-sell.

“ She managed to interact with me by asking relevant questions without digging too much into my personal details. She was not too intrusive but asked the right questions to get to know me well and introduce the right products to me.”In terms of discovering clients’ needs, luxury brands achieved a two digit growth through the years. One interesting point was observed in our study – shoppers are becoming more sensitive regarding their privacy and personal information safety. Therefore, training is necessary to teach SAs how they can understand shoppers’ needs without being pushy or intrusive and making shoppers uncomfortable.

… by providing convincing and personalized explanationsFor each high-end brand, it goes without saying that shoppers have high expectations regarding SAs’ professionalism in brand and product knowledge. Being professional is not just about having appropriate behavior towards shoppers. It also consists of the ability to provide shoppers with relevant tips and convincing explanations of products features and brand history, although shoppers are increasingly well-informed today. During the evaluation period, convincing skills did not show significant progress. From 2014 to 2016, SAs’ knowledge and professional attitude were perceived as relatively less effective than other service and selling aspects.

“ The SA talked in a very low voice and lacked confidence. She was not familiar with the brand and unable to respond to my questions well…After the visit, the only thing I learned from the SA was the origin of the brand.”Front line staff needs to be confident in their speech and therefore must have an in-depth knowledge of their products.

“ I can tell the SA was very sincere and tried to highlight the product features.When I raised objections, the SA positively responded and provided suitable solutions. I was convinced and willing to buy.”Chinese shoppers, who already use a wide range of tools to get information, want to understand how products personally meet their individual needs and requirements. The more staff are able to give clear, meaningful and personalized explanations, the more shoppers will enter the brand’s universe and be comfortable with their choice.

… even during shoppers’ departures Even if Chinese shoppers perceived an overall improvement (+12%) across years during the farewell, further efforts could be made.

+11%+15% +18%

+10% +12%+9%

Welcome Trial Departure

Discovery Knowledge Attitude

CONSUMER INSIGHTS: LUXURY IN-STORE BENCHMARK STUDY

“ The farewell was OK but if SA would have walked me to the door, it would have been more aligned with the premium brand image.”“ None of the SAs walked me to the door, only a simple ‘Bye Bye’. Maybe because the bracelet I purchased was relatively cheap, thus the SA was more enthusiastic when a frequent customer showed up. She ignored my questions regarding product catalogue, and rushed to serve the frequent customer. The different treatment was really disappointing.”Standing by shoppers until the end of the visit contributes to the VIP feeling and a positive final impression. Brands could remind staff the fundamental steps of the farewell (thanking, walking to the door and inviting to come back) and the importance of treating shoppers the same way during departure, whether a purchase has been made or not.

… with high-end CRM & Loyalty offersConsidering the unavoidable digitalization of POS and how shoppers are always connected; today CRM and loyalty programs are more than just collecting shoppers’ information and then following-up. Having a record of shoppers’ purchase history and locations enables luxury brands to provide more customized offers and retain shoppers. In a study of Chinese shoppers’ perceptions of loyalty programs, “89% of the respondents say loyalty programs increase their spending…and more than 50% of

those use loyalty program apps2 ”. On the contrary, the majority of the brands in our study underperformed in meeting this expectation - loyalty programs were rarely introduced to shoppers (around half of the visits). In our previous study of luxury brands’ digital competence3, we found that only 28% of the tested brands enabled the loyalty program feature in their WeChat accounts (one of the most popular social media platforms in China). Digital services and offers (through social media, emailing and loyalty programs) could be integrated into marketing strategies to offer shoppers a more seamless experience and finally create retention.

REACH RETAIL EXCELLENCEThere is a real thirst for enjoying a distinctive shopping experience. It is the brands that respect the curiosity, and understand the expectations and sophistication of Chinese shoppers who will benefit the most from their rising prominence in the global luxury market. The very first asset to reach this goal is the staff team. It is essential to train staff and enhance their skills with appropriate training delivered at the right time. AuCoeurDuLuxe is a leading provider of shopping experience evaluation, training and sales improvement. We care to cover the full customer experience (pre- and post- sales, on multiple touch points) to help you to make informed business decisions and reach retail excellence. We are dedicated to supporting our clients and delivering the best advice in luxury and retail. Please contact us for further information and to share your expectations.

2 Jing Daily, “Study: 89% of Chinese Consumers Say Loyalty Programs Increase Their Spending”, May, 20163 ACDL, Digital Index, June, 2016


2016 Beauty benchmark To provide an insightful vision of brands’ in-store performances, we led two Mystery Shopper Programs to track and compare top brands against others in Skincare (SKC), Make-up (MUP) and Fragrance (FRA). These benchmarks give an overview of the clients’ perceptions of their shopping experience in Hong Kong and Shanghai. Our objectives were :

To identify the gap between current in-store performance and clients’ expectations in the beauty industry in Hong Kong and Shanghai. To benchmark brands’ retail experience and pinpoint the market best practices. To provide insights and recommendations to attract and retain clients.

The surveys are now available in two cities: 2016 Beauty Benchmark Hong Kong, and 2016 Beauty Benchmark Shanghai

Would you like to order a survey? Do you want to investigate a specific topic? We are at your service to answer your questions and develop a totally customized market survey. Please contact us at [email protected] our website to Read more about our Publications! www.acdluxe.comFor any inquiries please contact us at [email protected]

Our Research department is dedicated to providing youwith powerful insights to drive your business decision-making.

AUCOEURDULUXE SURVEYS

2016 The Mainland Chinese Travel Retail study The invisible continent of tax-free shopping embodies true opportunities in today’s multi-channel retail environment. Retailers are vying to capture this fast growing channel of luxury goods, largely derived from the shifting travel and spending behaviors among the top-consuming nationality of luxury goods, the Mainland Chinese. Our survey focuses on defining the Mainland Chinese Traveller’s expectations in Travel Retail, their satisfaction of the retail experience and desires for the future. April 2016

During the 2016 Omni-channel Retailing Conference in Hong Kong and the 2016 Duty free and Travel retail Asia Pacific summit in Singapore, our President, Laurence Ouaknine, exposed the key findings of our Travel Retail survey. The Mainland Chinese - Travel Retail”, released last April.

With a new logo and new design, we reshaped our website to provide you an aspirational and comprehensive experience.From Market surveys to Mystery Shopping Programs and tailor-made Training solutions, AuCoeurDuLuxe stands as a leading international HR consulting & training group and is the right partner to improve your retail performance.

www.acdluxe.com

One of our clients requested our services to create rapid video learning (short video content) in order to strengthen their staff’s skills. Product knowledge, category knowledge and customer handling are the three topics covered in these trainings. By using diverse social networks (WeChat, Whatsapp, Vimeo) our client is able to share in a quick and effective way these trainings with their sales force. We pay attention to overcome language barriers by translating each video in local languages.

AuCoeurDuLuxe Studio is increasingly called on to create online training solutions.We also develop more complex e-learning modules, composed of film and quizzes that can interface with any Learning Management System. Online learning enables the transfer of knowledge in a short amount of time to a large number of your staff.

As AuCoeurDuLuxe continues to grow, we are always looking for exceptional talent. We welcome applicants from luxury retail, consulting and market research backgrounds who seek to push boundaries, work in dynamic teams and deliver leading insights and recommendations.

We are currently looking for positions in:• Training Director – North Asia• Training Consultant – E-learning specialist• Senior Consultant – Market research &

consumer insights

For opportunities with AuCoeurDuLuxe,please contact us at:[email protected]

Visit our New Website

Hiring NoweLearning: a new format for training that extends learning beyond the workplace.

HAPPENING NOW

AUCOEURDULUXE PUBLICATIONS

Since 2013, Retail Performance Asia, published by AuCoeurDuLuxe, gives you insights on the retail and the luxury trends in Asia.

Find in our latest issue Retail Asia #4, September 2015

Entertain Greater China’s Generation YAlso known as “millennials”, Generation Y is a key segment driving China’s dominance. Having surveyed luxury millennial buyers from Mainland China and Hong Kong, we shed light onto Gen Y’s luxury expectations and provide solutions in omni-channel marketing, sales and training.

Find good store managers in Asia The success of each luxury boutique largely rests on the shoulders of its manager. We look at the challenges brands face in Asia to find, develop and retain good store managers.

Strategies to overcome Greater China’s slowdownWe develop a barometer on customer satisfaction and experience of the in-store channel. Based on these results and combined with our retail knowledge, we provide key insights on how to differentiate and succeed in this highly evolving market.

The digital turning point for luxury retailLuxury brands have gone through transformative shifts when it comes to their relationship with digital and social technologies. In this article, we detail the key initiatives luxury brands can use to deliver a truly seamless omni-channel journey.

You may order the previous version or review the key articles on our website: www.acdluxe.com.

For any inquiries, please contact us at [email protected]


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