What Prada’s Late Push Into China Means for the Brand
Italian luxury house Prada is finally getting in the same boat that many of its peers joined months or even years prior, by launching flagship stores on two Chinese e-commerce platforms: Secoo and JD. Its Secoo store launched in late May, and its JD store launched on Sunday.
Starting only last year, Prada has been exclusively selling in China through its own e-commerce channels, to little success. The brand’s most recent earnings show that even though sales are up, profits have been suffering thanks to increased spending with less than ideal returns. Prada attributed the slump to flat sales in China because of more conservative spending among Chinese consumers, although other brands like Gucci were not affected to the same degree. China is important to luxury brand’s growth, to the point that when Dolce & Gabbana committed a series of gaffes in the Chinese market that led to mass outrage against the brand, it reportedly cost them up to $500 million in lost revenue.
Competitors including Burberry have been selling online in China since as far back as 2014. But now, thanks to a partnership with Chinese luxury retailer Secoo and its investor JD.com, Prada will finally have support on a local level.
One of the key reasons many non-Chinese brands partner with platforms Alibaba’s Tmall Luxury Pavilion or Farfetch China, which is jointly operated with JD, is because many of them are not used to dealing with the specifics of the Chinese market. The culture and shopping habits of the Chinese consumer are significantly different than those of European and American customers, according to Hannes Ben, chief international officer at ForwardPMX and an expert on the Chinese market. Chinese shoppers tend to focus on online and mobile shopping, and luxury brands like Burberry and Dolce & Gabbana have recently, infamously made some major cultural missteps in China.
“People in China want the Western product as it is,” said Ben. “Because it’s made in Paris or wherever, that’s what’s appealing to a lot of people there. But it’s the way you market it that has got to fit the Chinese model. That has to be adapted. You can’t just use Google and Facebook like you would in Europe, or just do the same thing on WeChat that you would here. It won’t translate.”
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