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Jun
2015

Affordable luxury for women

What’s in a term?

In the last issue of luxury Insights China we reviewed the affordable luxury handbag sector in China, one that was in essence originally created by Coach and then adopted by other premium brands to attract the middle class and affluent consumer classes of the country. The term has also seeped into the PR and positioning of brands in other sectors for similar reasons; a chance to upsell and up-position what in many cases are premium brands elsewhere in the world in a country where ‘luxury’ means status.

We have also seen many e-commerce sites that failed to sell luxury products because they didn’t have permission from the brand to do so, and because consumers were sceptical of product origins and quality, begin to sell ‘affordable luxury’ products instead. Principally in the fashion sector, these brands are premium international names that do not belong to large luxury groups and don’t have the financial muscle to leverage and enter China is a big way. Perhaps the more interesting adoption of the term affordable luxury is as a catch all for what in the west are designer brands, and those that are design led rather than fast fashion.

For the Chinese consumer designer brands are difficult to separate from the proliferation of fashion brands that exist here, the only real way this can and does happen is through recognition of the name of the designer. A designer that has good recognition elsewhere in the world is not necessarily recognised in China. Vivienne Westwood is known and admired, Marc Jacobs is seen on TV, but most others mean nothing to the mainstream consumer. When the brand is the designer, the designer therefore needs to put a great deal of themselves into brand building here in China if acceptance is to be achieved.

In researching this piece, we asked a sample of consumers to tell us whether brands on a list that we compiled based upon their ‘affordable luxury’ retail positioning, were or were not in their eyes within this category, the ‘luxury’ category or if they could place them at all. With a small sample, it wasn’t surprising that the responses were mixed, but we have selected ten of those on this list for closer examination. However, what was clear is that the term affordable luxury is recognised here and associated with products that are relatively expensive, but not mainstream luxury in origin or status.

Which brands fall into the category?

As with many things in China, perception as a result of PR is what determines initial acceptance of a brand in the eyes of the consumer, prior to further discussion within their personal circle. Coach consistently uses affordable luxury to describe itself, and has created an acceptance among consumers that it may not be ‘real’ luxury, but its almost there. This position justifies what are relatively high prices for mass produced product, but to the Chinese consumer this is acceptable. Within the female fashion category clear affordable luxury positioning is not currently defined by the brand itself, but by the position or location of its stores on the street or in the shopping mall, often ultimately determined by the distribution partner in China. Some mall operators have also recently set out to establish specific floors or locations in their premises where affordable luxury brands are co-located.

In our assessment of the female affordable luxury sector, we looked at three of the top luxury malls in Shanghai (Plaza 66, the GreatGate Way, IFC) and identified those brands on the second and third floors, which would be seen by consumers as brands that are not quite luxury. The 70 brands on our list were as belows. We then asked a small group of consumers to identify who on the list was affordable luxury, narrowing down our focus to just ten.

Ten brands in the spotlight

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Positioning, perception and performance

Taking our ten brands as benchmarks, we can see that the brands that fall into this category in China would not sit side-by-side in many other places in the world.

Pierre Balmain is seen as expensive and classic, but because it only has two stores that do not sit in the most expensive locations in a shopping mall, and does little advertising, it is naturally labelled as affordable luxury.

British shirt maker Thomas Pink is known for its quality and fabrics, yet in China the brand appears to be expensive and more mass market than luxury brands. Product here is certainly more expensive than in the UK, and probably made locally, and consumers see this. Its original luxury values have been downgraded rather than upgraded in China.

Marc Jacobs may be known as the man behind LV elsewhere in the world, but his status has not transferred to his own fashion line in China. The Marc by Marc Jacobs product is good quality, but expensive. It doesn’t stand out clearly from the high volumes of fashion lines in the country, and the designers name is not strong enough for the brand to be considered luxury.

Vivienne Westwood has had a strong following in China for many years, and long before 2011 when the brand first arrived. Her global recognition and quirky styling are well accepted here by many, and worn by those who want to stand out from the crowd. The brand has celebrity status, but is also known for rebellion and is therefore considered affordable luxury.

Jean Paul Gautier is a name that only the fashion elite know and admire. Like Vivienne Westwood, the designs are probably too dramatic for the generally conservative Chinese luxury consumer, another brand that will never be big in terms of retail presence, advertising or general market awareness, the expensive products and a lack of understanding of designer brands, JPG is classified within this category.

The fact that Juicy Couture is regarded as any form of luxury says something about the peculiarities of China. Like many brands from the west, high price points and an international status are often enough for them to be given a luxury label. Being awarded the label is one thing, but selling your product is another, even with 41 stores.

If Roberto Cavalli had the financial strength of Ferragamo or Zegna, and hence a retail presence of more than 4 stores, he too might be placed in the luxury sector, but he doesn’t, so again like many brands in this list, he is relegated to being seen as affordable luxury. His designs are popular with younger buyers, yet he doesn’t have the cache in social circles of his Italian peers.

The French ski fashion brand Moncler has made a great deal of effort to be seen in retail locations close to the main luxury brands in China, and has benefited from a positive perception. This action has been important particularly as down jackets for which it is known are both popular here, but available from many other sources both local and imported.

Becoming ‘famous’ in China as a result of being a judge on the Project Runway TV series has helped Michael Kors build his brand here in China, without it, he would be just another name. Like most other designer brands, his products are expensive and fall between true luxury and mass fast fashion that is plentiful in China. Leveraging the current fame will be important before consumers tire of the TV show and move on elsewhere.

DKNY is a brand that punches above its weight in China. It has positioned itself here as expensive, and leveraged the recognition of the brand name to justify these price points for premium quality. 46 stores across the country mean that it is reaching out into tier 2 and 3 cities, where the choice of ‘luxury’ will be limited.

Female affordable luxury and the future

The affordable luxury category for woman, is made up of designer brands that consumers need to put in a box they understand, and premium brands that have set their prices high in order to differentiate themselves from the huge fast fashion sector in the country. To the less experienced Chinese consumer, luxury status is initially based on price and little else, so its easy to understand why this mix of brands is pushed together for simplicity.

In the coming years, consumers will become more selective in what they buy, they will understand the value of good design and quality materials, and will therefore filter out those brands that do not belong in this sub sector. The bigger question is perhaps whether the sector itself will remain in common usage, or whether greater understanding will mean that consumers can determine whether a brand is luxury or not, and if its not, is it a designer brand. If this does happen, where will all those brand that like hermit crab or magpies have inhabited the shells or nests belonging to others go?

 


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