The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
SHANGHAI, China — As her team started to return to work after the extended Chinese New Year break, Meimei Ding had a difficult decision to make. Six weeks ago, her team were logging on to video conference calls from every corner of China, a country brought to a standstill by the coronavirus before any other. All eyes were on Ding as employees asked what her plan was to navigate the crisis.
Normally, Ding, the CEO of fashion showroom and buying agency DFO, would be preparing her team to bring Chinese buyers to European fashion weeks to broker deals with international brands. But with China in lockdown, it was impossible for her clients to make the trip, and DFO was faced with the prospect of cancelling its season altogether.
Young members of Ding’s team, however, seemed somewhat unperturbed by the difficult circumstances, and suggested utilising digital solutions to replace the physical showroom experience.
“These 25-year-old kids who work for me are all glued to streaming apps so they suggested livestreaming,” Ding says, adding that she was hesitant to embrace the idea at first.
“I thought a lot of the European brands would be especially reluctant. They don’t even send out line sheets, they do no distant ordering, so it was a big jump, but this was the only way we could do it,” she explains.
It's more efficient because you can do a single, well-planned, perfect session that speaks to hundreds of customers.
Over the course of Paris Fashion Week, the DFO team conducted 22 brand livestreaming sessions with independent labels including Etude, Ksenia Schnaider and Snow Xue Gao.
By reaching out digitally, double the number of Chinese buyers who would normally make the trip to Paris were able to tune in. The resulting orders, 95 percent of them placed digitally, reached 80 percent of DFO’s sales targets, with orders still coming in, a rate far greater than Ding expected.
“Of course, this season we did it as an emergency contingency, but I found it to be so exciting … and it’s more efficient because you can do a single, well-planned, perfect session that speaks to hundreds of customers. I truly regret that we haven’t experimented with this before,” she says.
Digitising the showroom and trade show processes of the fashion industry's wholesale trade is not new, of course; international firms such as Ordre, Joor, NuOrder and eFashion Paris have been offering digital solutions for years from their headquarters in Europe and the US.
Until now, however, digital showrooms and online ordering have largely remained on the sidelines of the fashion business because of the enduring belief in the necessity of touch and feel, as well as the importance of first-hand examinations of fabric, fit and cut.
While it is clear that the coronavirus pandemic has put into sharp focus the need for the fashion industry to rethink its traditional, large-scale, in-person wholesale format, even those at the epicentre of the move to online B2B platforms agree that the future is more omnichannel than purely online.
"Are we about to see the complete demise of physical showrooms and trade shows? No, we're not," said Ordre's founder Simon P. Lock late last year when interviewed about the topic for BoF and McKinsey's State of Fashion Report. "However, the industry is heading towards an omnichannel approach. While insignificant now, I believe in the next five years, 20 percent of B2B business will happen online."
A New Breed of Fashion Week
It makes sense that China, with favourable e-commerce penetration rates and a fashion industry populated with retail buyers not steeped in the same traditions as their European and North American counterparts, would be the market most likely to embrace a digitisation of the fashion week experience.
Starting next week, in what may be the highest-profile attempt at a digital-first fashion week to date, Shanghai Fashion Week, along with the Labelhood platform (which features some of the most exciting up-and-coming talent in China), have partnered with Alibaba’s Tmall for what they are calling an “on the cloud” fashion week.
From March 24 to 30 participating brands will use their scheduled show time to play a three-minute video presentation of Autumn/Winter 2020 collections on the Tmall platform, followed by an hour-long livestream.
Brands can use the livestream to talk about their new collections, and are also being encouraged to sell items from current season Spring/Summer 2020 through their Tmall stores (many Chinese brands showing already have their own Tmall stores, Labelhood also has a Tmall store that many of its brands will be able to use as a sales channel).
Ffixxed Studios, a stalwart on the Labelhood schedule at Shanghai Fashion Week will be showing "on the cloud", alongside brands including Angel Chen, 8on8, ShuShu/Tong, Songta and Private Policy.
“It’s pretty open and flexible [in terms of what brands can to with their allotted time],” says Ffixxed Studios co-founder Kain Picken. “It’s going to be interesting to see how everyone does it.”
Shanghai is not the only fashion week experimenting with digital alternatives. This week, Rakuten Fashion Week Tokyo is livestreaming catwalk shows via the organisation’s official website. Brands including Hideaki Yoshihara and Yukiko Ode’s Hyke, Jotaro Saito, and streetwear favourite Shoop will all present their latest collections digitally, without the usual front row fixture of editors, buyers and influencers.
Keeping the Industry Together
A major feature of the digital version of Shanghai Fashion Week will be how overtly consumer-facing it is, with brands selling directly to their customers via Tmall. Although organisers haven’t yet included any B2B activities in the official schedule, independent showrooms and trade shows plan to operate in conjunction with the Shanghai Fashion Week schedule, also utilising digital tools to connect brands and buyers.
“Shanghai Fashion Week is a symbolic, industry leading figure that is keeping us together,” Meimei Ding says. “Of course, it’s more of a marketing thing than a commercial proposition during these challenging times, but as long as there are brands making these great designs and people wanting to buy them, we should all be working together as an industry to facilitate that.”
DFO is running its digital showroom from March 15 to April 15 (an extended run to accommodate late-arriving brand samples caught up in China’s extended halt to production).
Ontimeshow traditionally runs its trade show alongside Shanghai Fashion Week and this year will be no exception, though it too will be taking its activities largely online.
I definitely think this is the future.
Founder Aroma Xie says they are still planning a smaller version of the offline trade show for buyers who are in Shanghai from April 8 to 15, but the focus will be more on introducing a newly-developed online ordering system.
“It was very quick, we decided to go for it in late January and we will launch it at the end of this month, so it’s [come together] in two months,” Xie explains, adding that the unique nature of the Chinese market made developing a specialised ordering service a must.
“We thought of working with overseas platforms, but it’s a little bit hard for them to adapt everything into a Chinese version. We developed the function and service based on our users and most of them are Chinese buyers’ stores, so we are customised for this market.”
Angel Chen, who was forced to abandon her show in Milan due to the spread of coronavirus in China, says she is “super happy” about the prospect of Ontimeshow’s online ordering system, which, though untested, is a necessary addition to a fashion week without buyers in attendance or large-scale physical trade shows.
“This online ordering system is definitely something we were looking for,” she says. “Before, we [used] an Excel spreadsheet, but this [will allow us] to finish the ordering in a shorter time and be more productive. I definitely think this is the future.”
Are Buyers On Board?
However, even those who are enthusiastically pursuing digital options for the current season are cautious about the potential for digital to completely replace the physical B2B ordering function
“I think there is still something missing if it’s totally digital,” Aroma Xie says, pointing out that new brands will disproportionately suffer from less orders as buyers are less likely to take the risk on them, rather than re-ordering from a brand with feel, fabrication and fit they are already familiar with.
“Offline [wholesale] is still necessary, but online is making things smoother and faster. The system can adapt, just like a virus can adapt,” she added.
Even if the industry is able to come up with adequate digital solutions for fashion week shows and B2B ordering, there are very real questions about how much business will be done, considering the hit that Chinese retailers (Shanghai Fashion Week’s major buying contingent) have taken in the first quarter of this year.
“For our regular customers, I don’t think the ordering online will be a problem. The bigger question will be about their strategy and their budget and how they want to handle their ordering moving forward,” says Picken, who will be showing the Ffixxed Studios collection with NOT Showroom, which is leaning more on digital video materials and video teleconferencing than livestreaming for its March 18 to 24 run.
Offline [wholesale] is still necessary, but online is making things smoother and faster.
Indeed, many of the domestic buyers that prop up Shanghai Fashion Week showrooms and trade shows are still uncertain about the best way to proceed with budgets and ordering for 2020.
Liu Xiaoran, founder of Dalian-based multi-brand retailer Inner Shop says that although their store turnover is down around 30 percent so far this year, compared to the same period in 2019, they will be participating in several upcoming digital showrooms, including Ryodan and Tube.
“Most of the Shanghai Fashion Week showrooms showed very fast reactions,” Liu says. “We [tend to be] conservative [when ordering] compared with our peers [anyway], and that has saved us.”
Renee Lu, who is charged with international buying for The Fashion Door, a multi-brand retailer with seven doors around China, headquartered in Guangzhou, skipped fashion month altogether this February. Their stores were closed throughout February, with some still not re-opened when BoF spoke with Lu in mid-March.
“We decided not to place any orders for this season as we are still not clear about the retail environment [in China] … [where] people are [still] scared to go out,” she said, adding that they will re-evaluate budgets and positions in May.
Ida Petersson, Womenswear and Menswear Buying Director at Browns Fashion, is one of an increasing number of international buyers to regularly attend Shanghai Fashion Week, her hope is that learnings and innovations that are being developed in different places will be shared to benefit the industry as a whole.
“I think it’s amazing they have found a way to showcase their local talent through this vehicle … [however] I still feel it’s necessary for cultural exchanges to happen, addressing factors like our carbon footprint as well as busy buying schedules [so] we can put more emphasis on platforming designers and mak[ing] them count,” she says.
Clearly, the spread of a pandemic has been the catalyst for many of these digital innovations, as well as the push industry insiders needed to embrace them, but this doesn’t mean the industry should or will return to business as usual when the pandemonium caused by the coronavirus is behind us.
Rather, it seems likely that elements of this digital experiment will remain, in conjunction with a traditional offline model. Shanghai Fashion Week has flagged future digital activations with Tmall as a distinct possibility.
"From the proposal to the go-ahead for this operation, it took less than a month. It is the perfect interpretation of China's speed and the vitality of our fashion week," Lv Xiaolei (aka Madame Lu), Deputy Secretary General of the Shanghai Fashion Week organising committee, told BoF.
“We hope that through this attempt, designers will try different displays, and sales channels will also reflect the future direction of fashion week. It should be said that we have not wasted a crisis."
FASHION & BEAUTY
Labelhood Schedule Announced
China's premier platform for independent domestic fashion, Labelhood, has announced its plans to show brand presentations on Tmall as part of the upcoming digital version of Shanghai Fashion Week. Between March 24 and 30, a total of 31 brands will show under the Labelhood umbrella on Tmall, not only presenting new season collections but utilising livestream slots in order to sell items from their current collections. (Nino Tang for BoF China)
Beauty Brands Benefit from Women’s Day Campaigns
The marketing blitz surrounding Women's Day on March 8 was in many ways the first test of consumer appetite for non-essential products since China entered various levels of quarantine in late January. Many fashion and beauty companies released Women's Day campaigns, with data now coming in from e-commerce giant Alibaba showing a sales bump, in particular for beauty brands. Domestic player Perfect Diary saw sales up 29 percent, Lancôme recorded a 110 percent rise and Estée Lauder was up 135 percent for the period (the latter two may indicate a shift from offline to online sales for the period). (WalkTheChat)
TECH & INNOVATION
JD.com | Source: Shutterstock
Prada and Burberry to Participate in Tmall's New Luxury Livestream
In a sign of how urgently brands from all over the price spectrum are pivoting to livestreaming in China in the wake of a near retail shutdown caused by the coronavirus outbreak, Tmall will hold a "New Luxury Day" livestreaming promotion for luxury brands on the 18th of every month. Brands including Prada, Burberry, Bottega Veneta and Miu Miu are among those signed up to participate. (BoF China)
JD.com Looks to Hong Kong for Second Listing
Online retailer JD.com is mulling a secondary listing in Hong Kong in May or June, joining competitor Alibaba. The Beijing-headquartered company has selected Citibank, UBS and CLSA as the lead underwriters for the listing and the offering size will reportedly not be determined until mid-April amid uncertainties over current market volatility. (Caixin)
TikTok Offshores 100 Content Monitoring Jobs
TikTok will halt using China-based moderators to monitor overseas content and shift that work to local markets outside of China. The decision will result in the transfer of more than 100 China-based moderators to other positions within the company, and is the latest effort by TikTok's owner Bytedance to distance itself from concerns about it being a Chinese-operated company. (Wall Street Journal)
CONSUMER & RETAIL
The Taikoo Hui mall in Guangzhou | Source: Swire Properties
Swire Properties Sees Profit Decline, With Positive Signs in Mainland
Swire Properties, a Hong Kong-based developer with multiple high-end shopping complexes in mainland China, has reported a 55 percent decrease in group-wide profit for the 2019 financial year, largely due to protests in Hong Kong. Swire's malls in mainland China saw revenue grow 10 percent growth in revenue, with occupancy rates nearing 100 percent. (Ladymax)
China’s Retail Sales Drop Precipitously
The first consumer spending data released by China's National Bureau of Statistics for January and February came in worse than expected, with a 20.5 percent over the same period last year. In comparison, December's retail sales recorded an 8 percent rise year-on-year. One bright side was the online sales of physical goods, which expanded 3 percent to 1.1 trillion yuan ($155.56 billion), accounting for 21.5 percent of the total retail sales in the first two months of 2020. (Xinhua)
POLITICS, ECONOMY, SOCIETY
A protective face mask | Source: Shutterstock
Post-Quarantine Divorce Rates Sky Rocket in China
As the coronavirus wanes in China, large numbers of couples across the country are filing for divorce after spending weeks at home together during self-isolation. The city of Xi'an has seen a record high number of divorce requests since official registries reopened on March 1. In some districts the numbers were so high officials say it will take until the end of March to process the backlog. (SupChina)
China Urges Officials to Help Boost Consumption
In something of a reversal of Xi Jinping's 2012 anti-corruption crackdown, in which local officials were encouraged to set a frugal example and avoid eating out or buying luxury products, these same officials are now being encouraged to lead the way in spending on F&B and consumer goods in order to encourage ordinary people in China to follow suit and get the country's consumption back on track. (Bloomberg)
US Journalists to be Expelled from China in Latest Round of Tit-for-Tat
China's foreign ministry announced it would expel almost all US nationals working in the country for The New York Times, The Wall Street Journal and The Washington Post in a move that impacts at least a dozen correspondents. According to China, these expulsions are in response to an earlier move by the US lessening the number of staff from Chinese state-controlled media it would allow to work on its soil. (Financial Times)
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