DIGITAL IQ INDEXLUXURY CHINA 2018 2July 2, 2018 INTRODUCTION RANKING KEY FINDINGSOWNED CHANNELS SEARCH SOCIAL MEDIA PAID & EARNED MEDIA FLASH OF GENIUS TAKEAWAYS BAIDU INDEX (6-MONTH AVERAGE) BA IDUIN DE X Y oYGR OW THPE RC EN TA GE 02K4K6K8K10K12K14K16K18K20K -50% 170% 150% 50% 30% 10% -10% -30% AVG. BRAND MENTIONS: 4,571 YoY GROWTH: -9% BURBERRY ARMANI DOLCE & GABANA BALLY HUGO BOSS DIOR GIVENCHY VERSACE HERMS GUCCI CHANEL KATE SPADEVALENTINO BALENCIAGA COACHLOUIS VUITTONCALVIN KLEIN CLINEMICHAEL KORS PRADA SAINT LAURENT Click to navigate through sections Gartner L2 research is based on data-driven analysis. Our fndings,rankings, and recommendations are objective, unbiased, andindependent of membership. R. Danielle Bailey | Head of APAC Research Liz Flora | Editor, APAC Research Wenyan Liu| Senior Research Associate, APAC Iris Shi | Research Associate, APAC Han Deng | Research Associate, APAC Camille Tagami | Designer Source: Gartner L2 Digital IQ Index: Luxury China, July 2018. Source: Gartner L2 Digital IQ Index: Luxury China, July 2018. China PowerExpected to make up 40 percent of all luxury spending by 2024,1 Chinese consumers areincreasingly important to luxury brands at a time of major shifts in both the global industry andthe China market.With China’s booming luxury market back to double-digit growth estimated at 20 percent,2 thetastes of the young Chinese consumer—particularly those in what is known as China’s post-95generation (those born after 1995)—yielded signifcant power over brands’ online performance inthe past year. The tastes of these young, digitally native shoppers lead the industry’s global shifttoward the streetwear aesthetic that boosted brands like Gucci and Balenciaga, and sent othersscrambling to replace their creative directors with those touting stronger streetwear credentials.Streetwear brands’ growth in online mentions, measured by Baidu Index, nearly doubledtraditional luxury fashion, allowing sneaker-savvy Gucci to see skyrocketing year-over-yeargrowth and earn the highest Baidu Index ranking of all fashion brands. Balenciaga was ridinghigh on the same wave until its popularity became its undoing when a videotaped brawlat its Paris Triple S sneaker launch led to negative online chatter in China. 1. “True-Luxury Global Consumer Insight,” BCG and Altagamma, February 20, 2018. 2. “2017 China Luxury Report,” Bain & Company, January 17, 2018. Luxury China: Baidu Index Growth for Chinese and English BrandTerms vs. Average Baidu IndexApril 2017 vs. April 2018, n=46 Fashion Brands ■ Pure Luxury Brands■ Accessible Luxury Brands Luxury China: Average Year-Over-Year Change inBrand Term in Baidu IndexAverage Baidu Index Based on Previous 30 DaysMay 2018, n=80 Search Terms FASHIONSTREETWEAR 5%17% For sole use of daniel.lu@loreal The report has been licensed to daniel.lu@loreal.2018 Gartner, Inc. and/or its Affiliates. All Rights Reserved.DIGITAL IQ INDEXLUXURY CHINA 2018 3July 2, 2018 INTRODUCTION RANKING KEY FINDINGSOWNED CHANNELS SEARCH SOCIAL MEDIA PAID & EARNED MEDIA FLASH OF GENIUS TAKEAWAYS Click to navigate through sections New LuxuryIn response to the Chinese luxury market’s return to growth,major labels like Louis Vuitton, Gucci, and Prada have launchedChina e-commerce in the past year. As WeChat remains aubiquitous necessity for daily life in China, brands have madecertain to add some form of e-commerce access via the app,be it a link to their online shop or their own WeChat store. Masse-tailers like Tmall and JD have also courted luxury brandswith increasingly elaborate platforms and luxury delivery logistics.On these platforms, brands can both take advantage of newluxury shopping experiences and also fght unauthorized third- party sellers.With younger consumers driving growth, brands have beenadjusting their marketing practices to feature more socialpromotions from post-95 celebrities. For example, the massivelypopular boy band TFBoys drove huge social engagement forDolce & Gabbana as group member Wang Yuan became itsbrand ambassador, walking in the brand’s runway show andtaking over its Weibo account for a campaign. This refected thetrend of celebrities driving the bulk of engagement on Weibo, aswell as on short video and livestreaming platforms where the lureof good-looking male celebrities, described in China as “youngfresh meat” (xiao xian rou 小鲜肉), is strong. Youth-oriented videoapp Douyin also attracted a small number of early adopters,rising to become China’s most-downloaded app in a matter ofmonths, while WeChat has yet to deliver solid engagement onbrands’ content—despite its evolution toward becoming a publiccontent platform in the past year. Luxury China: Brands That Have Added E-Commerce by PlatformApril 2017–April 2018■ Fashion■ Watch & Jewelry Note: Includes WeChat standalone stores, fash sales, and mini program stores and gift card sales.Source: Gartner L2 Digital IQ Index: Luxury China, July 2018. WECHAT COMMERCEDTCTMALLJD FLAGSHIP STORE Bally Calvin Klein Chlo Dolce & Gabbana Ermenegildo Zegna FendiFurlaGivenchyHermèskate spade new york LoeweLouis Vuitton Miu Miu Mode Creation MunichPrada Ralph LaurenSalvatore FerragamoStuart Weitzman Tommy HilfigerTUMIValentino Audemars Piguet De Beers ForevermarkLonginesOfficine Panerai RadoSwarovskiTiffany & Co. Bally Ermenegildo ZegnaFurlaGucciLouis VuittonMiu MiuMode Creation Munich PradaRimowaBulgariLongines Cole HaanFurlaGiorgio ArmaniRalph LaurenTod’s TUMILonginesRadoTissotZenith Ralph LaurenTod’s Swarovski Digital IQ=Shareholder Value Digital competence is inextricably linked to shareholder value.This study benchmarks the digital competence of 91 Luxurybrands across Fashion and Watches & Jewelry sectors inChina. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses,helping managers achieve greater return on incremental investment. Like the medium we areassessing, our approach is dynamic. Please reach out with comments to help improve ourmethodology and fndings. Regards, Gartner L2 For sole use of daniel.lu@loreal The report has been licensed to daniel.lu@loreal.2018 Gartner, Inc. and/or its Affiliates. All Rights Reserved.DIGITAL IQ INDEXLUXURY CHINA 2018 July 2, 2018 TABLE OF CONTENTS 4 27SPOTLIGHT: Travel the World with Alipay28Omnichannel Investments SEARCH 29 The Gray Market Lives30 Tmall: In Search of a Safe Haven31 WeChat Opens Up SOCIAL MEDIA32 TFBoys Take Over33 Top 10 Fashion Weibo Posts34 Omega is Alpha on Weibo35 Top 10 Weibo Posts36 Video Shines for Watches & Jewelry37 Top 10 Most-Viewed Watches & JewelryVideos on Weibo38 Livestreaming: Tmall vs. Yizhibo39 Douyin: Looking for the Fountain of Youth40 WeChat: Open for Business PAID & EARNED MEDIA41 KOLs42 Baidu Paid Search43 Ads All About Mobile Video METHODOLOGY DIGITAL IQ RANKING6 Company of Genius7 Gifted9 Average10 Challenged12 Feeble KEY FINDINGS15 Distribution16 Enterprise OWNED CHANNELS17 E-Commerce: Channel Control18WeChat is the Way19 Mini Programs Catch On20E-Tailers: Few Brands Take Safe Haven21Mass E-Tailers’ Pure-Plat Inspiration22Pure-Play E-Tailers23Is Presence Offcial24Mind the (Price) Gap25Crawling Toward Cross-Border26Reaching the Chinese Jetsetter15 17 44 48 49 5 29 32 41 6 FLASH OF GENIUS44 Selfegenic45 Songs for Streetwear46 Celebrity Collaborations47 E-Commerce Experiments for Qixi Festival TAKEAWAYS ABOUT GARTNER L2Click logo to return here For sole use of daniel.lu@loreal The report has been licensed to daniel.lu@loreal.2018 Gartner, Inc. and/or its Affiliates. 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