Gucci targets China’s post-Covid luxury surge with Alibaba tie-up

Gucci targets China’s post-Covid luxury surge with Alibaba tie-up

Gucci will launch two online stores in China alongside ecommerce group Alibaba, as the high-end brand counts on a post-coronavirus boom in luxury goods spending in the country to offset sluggish sales in the west.

The European fashion house said on Friday that it would launch the virtual outlets on Alibaba’s Tmall platform, in what marks the latest effort by western luxury houses to tap into a market that is gaining momentum as China’s economy recovers from Covid-19.

Analysts suggested the move also meant premium fashion brands were putting to one side image concerns over marketing their products en masse to Chinese consumers, as well as over the prevalence of counterfeiting in the country.

“The inclusion of luxury goods in ecommerce platforms — a destination for bargains — may lead to a drop in brand image,” said Yang Jingzhu, founder of AmeriChina Group, a Beijing-based consultancy. “But the huge popularity of Tmall among both rich or poor makes it a powerful channel for Gucci to improve sales.”

Gucci’s first Tmall store, which will sell everything from bags to shoes, will launch on December 21. A second outlet focused on beauty products will open in February and will be managed by US brand Coty.

China’s luxury market has taken off after Beijing successfully controlled the spread of Covid-19. Bain, a consultancy, forecast that sales of high-end fashion goods in the world’s most populous nation would grow by almost half this year to Rmb346bn ($52.9bn) as global travel restrictions meant shoppers bought locally instead.

Bain’s research shows that China’s online sales of luxury goods more than doubled in the first 10 months of 2020 compared with a year earlier. Ecommerce outlets are expected to account for 23 per cent of total luxury sales this year, up from 13 per cent in 2019.

“Online purchasing has become the most dynamic growth engine for Chinese luxury spending,” said Simon Tye, executive director at CSG INTAGE Group, a consultancy.

Luxury brands have traditionally been reluctant to explore partnerships with China’s online platforms, which are known for selling cheap — and sometimes fake — goods.

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