China Luxury
Digital Playbook
Joint report by BCG and Tencent
JUNE 2019Tencent x BCG luxury consumer insight study

Tencent data

Consumer survey

Data source

Tencent DMP

Tencent platform users’ survey
responses

Sample size

Chinese luxury consumers(customized BCG x Tencent tags)~1500 consumers(luxury buyers in past 12 months)

Key outputs

Luxury consumer profile anddigital behavior

Luxury touchpoints and purchasepathway; category differences1

Contents

01. Insights into China’s luxury consumers
02. The digital ecosystems reshaping luxury
marketing in China
03. New capabilities, new starting point2

In 2018 China's luxury market exceeded €110 Bn, 33% of the
global market, and is growing at 6%5-6% growth CAGR

China will contribute 41% of global luxury
consumption by 2025

€ billion, retail value€ billion, retail value

Chinese personal luxury market maintains

+5-6%
+4%
98
27%

32%
105

95

28%

28%

157-164

405
334

111

241

28%

Rest of world

222
69%

73%

72%

73%

72%

111

(33%)
2015

2016

2017

True luxury

2018
Accessible luxury

2025F

2018

164

(41%)

China

2025F

74% of global growthNote: Chinese includes purchases abroad; personal includes leather accessories, apparel, watches and jewelry, fragrances and cosmetics
Source: BCG Luxury Market Model3

Among true-luxury goods, ready-to-wear, watches/jewelry
and handbags each contribute €6-7 Bn in retail sales
2018 China's true-luxury market size – by category (€ billion)
6
6
7

4
16%

4
15%

22%

27

100%

23%

24%
Ready-to-wear Watches/jewelry

Purchase penetration
among luxury
consumers1（%）

61

44

Handbags

Accessories

Shoes

42

54

50

1. Percentage of those who have purchased the category in the past 12 months; 2. true luxury only, excluding perfumes and cosmetics
Source: BCG X Tencent Luxury Study, 2019

Total 2

4

Backup: this report focuses on the true luxury categories listed below, andexcludes accessible luxury, fragrances and cosmetics
Personal luxury goods
Category

Sub-category

Threshold price

1. Handbags

1. Handbags>1,000 € / each

2. Shoes

2. Shoes>350 € / each

3. Sunglasses>180 € / each

4. Scarves/small leather goods>180 € / each

5. Outerwear/ coats>1,400 € / each

6. Dresses>1,200 € / each

7. Suits>1,600 € / each

8. Sweaters / knitwear>400 € / each

9. Shirts / Topwear>200 € / each

10. Jeans / pants / skirts>250 € / each

5. Watches

11. Watches>2,000 € / each

6. Jewelry

12. Jewelry>1,200 € / each

3. Accessories

4. Ready towear

5Summary of insights
1

Luxury consumers continue to be young, 48% of them are aged below 30 and contribute 42% of luxury sales

2

Majority of true luxury consumers are from Top 50 cities (tier 2 or above); consumers in tier 3 cities and below
contribute 27% of total sales

3

Luxury consumers can be classified into 9 segments: Absolute luxurer, Megacitier and Rich Upstarter represent the 3largest segments

4

Luxury purchases continue to be highly influenced by digital: on average, 60% of the 4-5 touchpoints before final
purchase are online; for handbags, the number of online touch points for handbags is as high as 6-7

5Social media influence remains strong: 50% of consumers are influenced via the WeChat ecosystem; consumers prefer ahighly curated, personalized social experience

6

KOL is a key influence on consumers aged below 30; KOLs are becoming more diverse in their online personalities andtheir content/themes increasingly fragmented

7

Media influence has evolved from digital content to idols created by ecosystems and immersive virtual characters (e.g.
from mobile gaming)

8

Overall 80% of luxury purchase journeys are ROPO, 20% higher than the global average

9

Half of luxury consumers expect improvement of digital experience at offline stores，i.e. smart fitting, VR/AR
experience and smart interactive screens

10

Online accounts for 12% of purchases: brand E-com (e.g. Mini programs) is on the rise, already 33% of total online

6

1

Luxury consumers continue to be young, 48% of them areaged below 30 and contribute 42% of luxury sales
Consumers in each age group
18-25

26-30

31-35

36-40

40+

% of luxury consumers

18%

30%

30%

14%

9%

Luxury retail sales contribution %

12%

30%

32%

16%

10%

8

11

12

13

14

Average luxury spend per luxury
consumer (€, K)
Source: BCG X Tencent Luxury Study, 20197

1High penetration of young consumers in RTW, accessories
and shoes; older consumers core for handbags/jewelry
2018 average spend and purchase penetration – by category and by age
Ready-towear

Watches/
jewelry

Penetration1

Penetration

Handbags

Accessories

Shoes

Penetration

Penetration

Penetration

18-25

4.0

57

4,5

29

4,0

30

3.3

56

2.7

51

26-30

4.4

57

6.3

45

5,7

44

2.8

53

2.9

49

31-35

4.5

66

6,2

52

5,9

49

2.8

54

3.7

51

36-40

4.7

64

6,0

39

7.3

43

5.0

53

4.2

53

40+

5.5

59

56
5,6

49

9,7

32

5.0

58

4.4

43

1. Percentage of those who have purchased the category in the past 12 months
Source: BCG X Tencent Luxury Study, 2019

Annual avg. spend
(€,K)

8

1

2018 true-luxury market size by category and age (€ , billion)
6.6

26-35 y.o. the corecustomers ofwatches/jewelry
and handbags,
consumption forother categories areevenly distributed
among age groups

18-25

0.9
(14%)

26-30

2.0
(30%)

31-35

2.1
(32%)

36-40
40+

0.7
(10%)

1.0
(15%)

Ready-to-wear

Source: BCG X Tencent Luxury Study, 2019

6.0
0.5
(9%)

6.0
0.5
(8%)

2.0
(33%)

2.0
(33%)

2.2
(37%)

0.5
(8%)

0.8
(13%)

Watches/
jewelry

1.8
(31%)

0.6
(11%)

1.0
(17%)

4.4

4.1

0.8
(18%)

0.6
(14%)

1.1
(24%)

1.0
(24%)
0.9
(20%)
0.6
(14%)

1.0
(25%)
1.3
(33%)
0.7
(18%)

0.4
(10%)

Handbags Accessories Shoes

92Over 70% of true luxury sales come from the ~50 tier 2 orabove cities
City tierShandong

BJ/SH/GZ/SZ( Top 4 cities)

26%

32%

13

Tier 1(11 cities)

21%

22%

12

Tier 2(32 cities）

18%

19%

11

Tier 3 & below(2206 cities)

35%

27%

9

Jiangsu

四川
SichuanZhejiang广东

Source: BCG X Tencent Luxury Study, 2019

% of luxury Luxury retail sales Avg. luxury spend
consumers
contribution %per luxury
consumer (€,K )Luxury consumers
7%+
5-7%
3-5%
1-3%
0-1%

10

2

Lower tier consumers' spend on RTW, watches/jewelry andhandbags still lags behind their high tier counterparts
2018 average spend and purchase penetration – by category and by city tier
Ready-towear

Watches/
jewelry

Penetration1

Penetration

Handbags

Accessories

Shoes

Penetration

Penetration

Penetration

BJ/SH/
GZ/SZ

5.3

56

6.2

44

6.3

53

3.3

60

3.3

59

Tier 1

5,0

57

6,3

47

5.9

43

3.2

54

3,5

48

Tier 2

4,7

62

6,5

45

5,6

38

3,2

56

3,1

53

Tier 3& below

3,7

66

4,7

42

5,1

35

3,1

49

3,2

43

1. Percentage of those who have purchased the category in the past 12 months
Source: BCG X Tencent Luxury Study, 2019

Annual avg. spend
(€,K)
11

2

2018 true-luxury market size by category and city tier (€ ,billion)Majority of
consumption
comes from tier 2or above cities
across categories

6.6

6.0

Top 4

1.9
(29)

1.7
(28)

Tier 1

1.5
(23)

1.5
(25)

Tier 2

1.3
(20)

1.3
(22)

Tier 3and below

1.9
(29)

1.5
(25)

1.4
(24)

Ready-to-wear

Watches/
jewelry

Handbags

Source: BCG X Tencent Luxury Study, 2019

6.0

2.3
(39)

1.3
(22)

0.9
(15)

4.4

4.1

1.4
(33)

1.3
(33)

0.9
(21)

0.9
(23)

0.8
(19)

0.7
(18)

1.2
(28)

1.1
(28)

Accessories Shoes

123China luxury consumers can be classified into 9 segments
Emotional needs for luxury consumption

Luxury sophistication level

Following trend

SophisticatedSeeking quality/classic style

Expressing status

Pursuing
top-fashion

Pursuing selfexpression

Social Wearer

Absolute Luxurer

9%16%Timeless Proper

12%Rich Upstarter

ExploreTrend Follower/
Classpirational

8%
Entry

14%

Megacitier

11%

16%

Status Seeker

Statement Seeker

7%

7%
x

Source: BCG X Tencent Luxury Study, 2019

Fashionista

Market value share13

3" Absolute Luxury","Megacitier" and "Rich Upstarter"
represent the 3 largest segments
Absolute Luxurer

Attitudes

Age and citytier

• Very experienced luxury
buyer, fashion-forward• Values exclusivity andcustomization

Rich Upstarter• Pursues and explores
individual style• Fashionable and wellinformed• Looking for status andrecognition• Inexperienced with luxury,
un-sophisticated% of 18-30% of top 4 & tier 1% of 18-30% of top 4 & tier 1% of 18-30% of top 4 & tier 1

40%

55%

42%

62%

39%

52%

% of luxury Annual spend % of digitalconsumers(€,K)
touchpoints1

Purchasebehaviors

Megacitier

4%

40.4

64%

% of luxury Annual spend % of digitalconsumers(€,K)
touchpoints1

12%

1. Proportion of digital touchpoints among all touchpoints, during the discovery and research stages
Source: BCG X Tencent Luxury Study, 2019

14.9

62%

% of luxury Annual spend % of digitalconsumers(€,K)
touchpoints1

14%

8.8

63%

14

4

Consumers are exposed to an average of 4-5 touch points
during discovery and research, of which ~60% are digital

Average touchpoints2% of digital
Touch points3

Discovery

Research

Purchase

DeliveryAftersales

5.0

4.1

1.0

1.0

2.5

60%

69%

12%1

10%1

66%

1. Exclusive of Daigou; 2.Touch points exposed per stage by a luxury consumer； 3. Proportion of digital touch points among all touch points
Source: BCG X Tencent Luxury Study, 201915

4

Extremely complicated purchase pathway for handbags andshoes; highly digitalized discovery and researchDiscovery% of digital touchpoints1

Avg. touch points

58%

2,7
10.0

Watches/
jewelry% of digital touchpoints1

71%

3,4

63%

2,2

Handbags

63%
64%

Avg. touch points

RTW

4,3

55%
62%

Research

6,48,0

1. Proportion of digital touch points among all touch points
Source: BCG X Tencent Luxury Study, 2019

Accessories

Shoes

8.1

69%

69%

5,1
6,9

73%

16

5

Social content and digital media draw ~50% of attention;
offline creative marketing gaining traction
Discovery touchpoints by consumer attention
Online / mobile

Earnedtraffic:25%

OfflineStrong increase，>5%

Other digital media
traffic:22%
Social content
traffic: 24%
7%

10%

Organic
traffic:20%

Trend vs. 2018

8%

10%
15%

20%

11%
3%

Offlinemarketing:10%

3%

Driven by offline creative
marketing, i.e. fashion
show, exhibit andinnovative OOH

Increase of online WOM,
including friends' momentads/chats, communication
with sales assistant andcustomer service

100%

Offline word- Online word- TVC/Print/of mouthof-mouth
Event/OOH

Total

14%
KOL (on
WeChat/Weibo/Red)

Brand Social Other social
Media
media2(WeChatand Weibo)

Brand weband miniprogram

Digitalimpressionbased
advertising1

Third
party ECStore

17
1. Primarily Moments ads and OTV ads；2. including short videos and other social media

5

During discovery and research, over 60% of the online
touch points are on social media

Discovery

Research

What triggered your interest in the product？
(Multiple choice)Through what channels did you do research before
making your purchase decision？ (Multiple choice)

Discovery - % of luxury consumers

Research - % of luxury consumers

83%

84%

Online touch point
penetration1

69%

Social media
penetration2

Online touch point
penetration1

1. Proportion of luxury consumers who were exposed to online touch points； 2. Proportion of luxury consumers who were exposed to social media
Source: BCG X Tencent Luxury Study, 201967%

Social media
penetration2

18

5

WeChat is the most used social platform during discovery
and research, followed by Weibo and Little Red Book
What triggered your interest in the product？
(Multiple choice)

Discovery - % of consumers1

Research - % of consumers1

WeChat ecosystem 2

52

Weibo

Through what channels did you do research before
making purchase decision？ (Multiple choice)

WeChat ecosystem 2
Weibo

28

Red

19

43
35

Red

Plz help change thechart “Red” to“Little Red book”

29

Short videos

7

Short videos

3

Others5

Others3

1.Base is all luxury consumers, numbers represent % of consumers who were exposed to the channel; 2. includes WeChat
mini program,WeChat public account and WeChat moments of friends/sales assistants
Source: BCG X Tencent Luxury Study, 201919

5Consumers' increasing preference towards personalizedsocial networking driven by unique digital ecosystems
2008

2018
BedtimeBreakfast

BedtimeBreakfast

Evening

CommuteEvening

CommuteDinnerLunch

DinnerLunch

Kid pick-up

Tea breakUndifferentiated mass social networking focused on information
distribution
Source: desk research, BCG analysis

Kid pick-up

Tea breakMore personalized, digitized 24/7 social networking scenes
206More than 70% of consumers, mainly those young
consumers aged below 30, are still influenced by KOLs?

Which type of fashion influencer has
the highest impact on you?

42

25

21

2

Source: BCG X Tencent Luxury Study, 2019

Others

Fashion blogger• They have started their own EC business via WeChat
Mini Programs ("Content EC”)
• Jointly produced limited-edition products with thefashion industry, i.e. Mr. Bag's collaboration with
Givenchy and Tod's
Stars/supermodels• Popularization: celebrities with more down-to-earth andapplicable fashion styles gain popularity

10

FashionStars/
Internet
blogger supermodels celebrity

Trends of fashion KOL

None ofthe above

Internet celebrity• Celebritization: their style and reviews influence thepurchase decisions of post '90/’00s consumers• Multi-platform: they promote customized content suitedfor different platforms to attract more followers
216

More diverse types of fashion bloggers, stars and internet
celebrities, and more fragmented social media content
GlobalChina

Limited KOL types...

A list stars

Fashionista

Niche internet
celebrities

Celebrities w/
huge fan baseProduct
influencers

Home decor
loversSharenting

Fitness lover

Islandcollectors

Food
bloggers

Girls next door

Artsy
backpackers

Brand productcollectors

Fitness

Limited social media topics:
Fashion street snap, lifestyle pics,and travel

Source: desk research, BCG analysis

Food & culinary delight

Fashion Travel & photography
DivingSkiing/snowboarding

SkincareAstrology

Fragmented
luxury fashion
related stars
and internet
celebrities...

...withbroader topics

Celebrity gossip

Baby careMusic

Cosmetics Home decor Movie/TV>40,000
Social media
topics22

7

Format wise, media has evolved from digital content toidols created by ecosystems and immersive VR experiences

Immersive VR experience
Idols created by ecosystems
Digital content• Content created by fashion KOL,and frequent interaction w/
consumers via social media• Text, pictures, and new formats
such as short videos
Source: desk research, BCG analysis• Consumers involved in thecreation of idols via talent show
i.e. Produce 101• Strong emotional bonding, thus
higher willingness to pay• More interactive and entertaining
digital content, i.e. games andvirtual idols• Immersive digital experienceenabled by technology

23

8Overall 80% of luxury purchase journeys are ROPO, muchhigher than the global average
ROPO：research online,
purchase offline
45%

11%

100%

1%

• Proportion of ROPO is 30%
higher than global average• And ～20% higher than in
2018

37%

2%

4%

Store solo Store solo ROPO –– China – abroad
China
1. Excluding Daigou
Source: BCG X Tencent Luxury Study, 2019

Purchase pathway of China
luxury consumers is highly
digitalized

ROPO –
abroadShowrooming

Online
solo1

Total

Even overseas luxury
consumption is highly
influenced by domestic online
touch points before purchase24

8

Shopping mall the main purchase channel for domestic
offline sales; brand pop-up stores also help boost sales
Through which channel did you purchase your most recent luxury product? (Single choice)

Purchase channel break down（%）
Domestic online

12%

Daigou12%

Purchase channel break down（%）- domestic offline deep-diveShopping mall
Domestic offline

46

20

21

19

16

17

11
4

15
1

15

16

BJ/SH/GZ/SZ

Tier 1

Tier 2Tier 3 &
below

72

65

32%
Department store

Overseas offline– travel retail

60

49

43%

17

Brand store

13

Brand pop-up store

10
Overall

Source: BCG X Tencent Luxury Study, 2019

13

25

9

Nearly half of luxury consumers expect improvement indigital shopping experience at offline stores
What digital features would you be interested in for future offline stores? (Multiple choice)Smartfitting

VR/ARexperience

Smartinteractive
screenSelfservice
browsing

Selfservice
order

43%

36%

33%

30%

30%

Source: BCG X Tencent Luxury Study, 2019Intelligent
Face
robot
recognition
servicepayment

27%

16%

QR codeshopping

16%

Fingerprint Electronic
recognition posters/ads
payment

15%

14%

26

10

12% of purchases are pure online; brand own E-com is on
the rise, currently 1/3 of total online
Through which channel did you purchase your most recent luxury product? (Single choice)

Purchase channel break down（%）
Domestic online

12%

Daigou12%

Domestic offline

32%

Overseas offline– travel retail43%

E-com platforms 1

35%

Brand self-run E-com 2

33%

Multi-brand platforms3

32%

1. Including Taobao/Tmall/JD； 2. Including brand official website, APP and WeChat mini program；3. Including nondiscount online luxury multi-brand platforms, i.e. Farfetch, Shopbop
Source: BCG X Tencent Luxury Study, 2019

Luxury online sales is still at its
infancy, consumer purchasepenetration hasn't yet made asignificant breakthroughBrand-driven online channels
growing fast, driven by the rise ofbrand WeChat mini programs andofficial accounts

27

Contents

01. Insights into China’s luxury consumers
02. The digital ecosystems reshaping luxury
marketing in China
03. New capabilities, new starting point
28

Continued increase in
Increase of digital marking spend driven bydigital marketing spend social media and EC platforms
2018 luxury marketing spend breakdown
(%)

(%)

100

Key observations
China luxury consumers are young,driving the increase of social media
marketing spend

Trend

100

40-60

50-60%

Trend

Social media• Diverse social media platforms• Rich and visualized media format

DigitalImportance of search and purchaseroles for vertical EC and EC platforms
increases
10-20

40-50%

Traditional

E-com

Stable investment in Brand.com
5-10
5-10
5-10
5

Brand.com
E-magazine/
editorial
SearchOthersNote: more than 10 luxury brands covered
Source: expert interviews, BCG analysis• More in WeChat ecosystem, i.e.
official account and mini program

Minimal spend on search engines sothat customers can find relevant info29

Traditional marketing
spend shifts to digital2018 luxury marketing spend breakdown(%)

Pop-up store and PR event the growth driversof traditional marketing
(%)

100

30-40

OOH

Digital• I.e. "Volez, Voguez, Voyagez" by LV,
and "Mademoiselle Privé" by Chanel
Small investment in pop-up stores candrive higher traffic and sales conversion

30-35

40-50%Key observations
More investment in events to create social
buzz and promote brand spirit

Trend

100

50-60%

Trend

Print

• Consumers are willing to share pop-up
store experiences on social media
Other traditional channels have stagnatedTraditional• Print preferred by older consumers

10-20

PR/event

10

Pop-up store• Poor efficiency of OOH due to fixedlocation

5TV• TV spend focuses mainly on digital TV

Note: more than 10 luxury brands covered
Source: expert interviews, BCG analysis

30

As investment indigital marketing
increases, luxury
brands need tounderstand how to
do it efficiently

Data driven

Social media

Omnichannel

31

Data driven

Data driven: analyze consumer profiles and needs to makedata-driven marketing decisions
Data integration
Real-time monitoring
Result quantification• Integrate data across online andoffline touch points, holisticallymanage client data along thepathway (from discovery topurchase and after sales)• Data monitoring, i.e. conduct
A/B test together withmarketing activities, to monitor
marketing efficiencies• Integrate domestic and overseas
purchase data for Chinese
consumers to do better CRM• Leverage data results to adjust
marketing spend in an agile
manner• Quantify results, optimize andmake timely adjustments tomarketing spend across touchpoints32

MontBlanc: utilize oCPA to dynamically adjust marketing spend and to increase
conversion rate of followers and salesoCPA
Promoted 3 ads withdifferent styles at thestart of campaign,identified the mostclicked ad via oCPA,
then increased
investment for that adMore clicks, more
followers, and higher
sales conversion
efficiency

Cost per follower ismuch less thanindustry average

33

Social media

Social media: companies need to excel in four dimensions toachieve efficient social media marketing
Accurate consumer
targeting

The right media
partner/KOL

Consumer touchpoints expansion

Content creation
adjustment• Obtain precise customer profiles, including demographics, emotional needs, fashion
sophistication level, via internal CRM and media advertising data

• Manage and distribute varied content across different target consumer segments• In-depth understanding of potential partners' follower base via big data to help build the mostsuitable media/IP/KOL mix• Maximize marketing investment and efficiency through real-time monitoring and adjustmentof media campaign• For new customers or customers have no access to offline stores, the roles of social
media platforms range from discovery/research to purchase and aftersales• For existing customers, social media platforms are a connecting point, allowing brands
to conduct consumer analysis to help offline stores better serve customers• Rapid generation and distribution of content suitable for social media, i.e. for consumers withshort attention spans and exposed to constantly changing hot topics• Content with diverse perspectives (i.e. localized content) to target desired consumers• Try interactive technologies and encourage UGC content and social sharing

Source: BCG analysis

342Hermes: used ads retargeting on WeChat to provide customized content andclosed-loop omnichannel experience
Ads retargeting

Customized content

Close-loop O2O experience

Leverage 1st round of engagement resultsand Mini Program data for ads
retargeting:• Mini Program interaction group andother historical engagement group• Brand followers and lookalikes• Keyword searcher (i.e. competitor)• Fashion lover and high-end user

Customized interaction w/ brand product• Swipe right or left to choose favorite
theme song
• Click button to create own silk mix

Interaction on mini program
Social sharing

WeChat ad

O2O experience

Redemption

Eventreservation

ReminderAutomatically pushreminder to users via SMS or
service message on WeChat

Tripled engagement rate of phase 1,
engagement rate of Mini Program groupreached 28%

Generated 15,000+ songs, each consumer
spent an average of 43s per viewing

87% of Mini Program traffic driven by
WeChat ads; 3500+ people reserved an
event, 60% from online

35

Gucci: combine social media ads in a single
campaign to maximize publicity and sales conversion
KOL
endorsement

Brand
awareness

Sales
conversion• WeChat vertical KOLs
Mr. Bag and Shiliupo• Engagement rate1 triples
industry benchmark• Identified 2 highly
relevant public
accounts based on
Gucci fans

• Engagement rate of KOL
influenced audience
quadruple industry
benchmark• Launched limitededition on Mini Programand online stores,
converted social buzz
and awareness to sales• Collaborated w/ fashion
blogger Gogoboi, andlaunched exclusive 2017
Holiday series together

1. Engagement rate considers clicks, likes and comments

36

Omnichannel

Omnichannel: brands need to provide personalized & holistic
brand experience across increasingly complex touchpoints
Potential challenges for omnichannel marketing

Lack ofdifferentiated roles
per touchpoint

Inconsistent brandimage acrosstouchpoints

Isolation of online/
offline touchpoints

Consumer touchpoints are complex withdifferent roles, requiring more precise
targeting and content distribution• I.e. media impact might not increasesignificantly if the same content is
distributed across touchpoints

Different sources of content, withdifferent teams in charge, result ininconsistent quality and image• I.e. Offline store display and communication
are inconsistent with digital media
communication

Separation between digital audience andoffline customers/existing CRM data,
decreasing traffic and sales uplift• I.e. digital marketing efficiency is stillmeasured by publicity, rather thanquantifiable results

Brand strategies• Target different segments via different platforms withcustomized content• Identify use cases to formulate interactive
communication strategy– I.e. launch online video ads and Moments ads
together to boost awareness and sales conversion• Centralize content creation capabilities/function anddistribution of content across touchpoints managed bydigital content expert, to ensure brand image
consistency in terms of content format, visual display
style and ways of communication• Experiment diverse methods to drive traffic from online
to offline, i.e. use online labeling system or Official
Account follower data to identify potential consumers
and push customized offline store events andinvites/gifts

37

3Louis Vuitton: using WeChat ecosystem to facilitate a smooth O2O experienceand consumer journey to offline events
Reach: Online & offline to Mini Program

Convert：brand zone & Mini
Program to reserve offline events

OnlineOfflineOnlineOffline3 rounds of Moments Ads toattract various consumers
to event Mini Program

Event Mini Program
QR code displayed atoffline stores and inmagazines

WeChat ecosystem, including
brand zone, Official Accountand brand store, to directtraffic to offline event

Offline exhibition

Official account
WeChat store

Offline event reservation

38

Vacheron Constantin: closed-loop O2O shopping experience to expedite
consumer decision making process from interest to final purchase
Consumer purchase journey• Interaction/ like rate: 2 times industry
avg. in past 10 months• Comment rate: 3 times industry avg.
in past 10 months• Sales: 38 limited-edition watches
launched, 10+ sold in 3 days, all by
NEW buyers

Step 1

Step 2

Step 3

LBS-TA
Precision
targeting

Limitededition soldon WeChat

Prepayment
in WeChat

Step 4

Step 5

Brand CRM

1-1 prestige
service

Step 6Store
experience/
product
pickupPurchase

39

Contents

01. Insights into China’s luxury consumers
02. The digital ecosystems reshaping luxury
marketing in China
03. New capabilities, new starting point40

Luxury players need to build capabilities in 3 dimensions toachieve long-term digital transformation

Centralized data
integration and analytics

More flexible organization
and ways of working

Enablement with cuttingedge IT tools

Companies need to integratecross-functional data, build
integrated data platform andimplement data driven decision
making processes

Reshape agile ways of working andcompany culture, align objectives,and orchestrate cross-function
digital transformation

Build IT infrastructure for thedigital era, integrate new IT
technologies to improve customer
experience & operating efficiency
41

Centralized data
integration & analytics
Present…
Valuable data scattered across different
business units, i.e.:• Sales and CRM teams control offline
sales data and customer information• Media procurement team control dataon online media advertising andconsumer research results• EC team controls online sales and online
customer information

No real-time monitoring; lack of crossfunctional accountability and data
integration

Future…
Centralized enterprise data platform• Integrate and match data via consumer
profiles in order to gather 360-degree insights
on consumer online/offline purchases, mediabrowsing behavior etc.

Data-driven business decision making• Better resource allocation across touchpoints
and channels along consumer purchasepathway with the support of data; achieveprecision marketing among target consumers• Proactively track consumer trends asreference for future campaign planning,procurement and even new project designs

42More flexible organization& way of working

Future…
Symphonized digital transformation

Present…

•

A "conductor" who orchestrates cross-functional
project design, implementation and the creationof digital infrastructure

Digital related functions are dispersed
and independent of each other, i.e.:•

A "platform" that provides the capabilities fordata integration and analytics•

Multiple "small front ends" to showcase theirbusiness expertise for different digital use cases• Digital marketing team in charge of
online KOL and media collaboration• Online media procurement team

Incentivize creative and agile ways ofworking and culture• E-commerce team•

Digital transformation needs to be rolled out in
multiple agile iterations• CRM team•

Separation of functions might be replaced withmore flexible and business-first way of working

Old fashioned and conservative company
systems, which operate via strict
function-specific plans and KPIevaluation

Uniform evaluation and incentives•

Align digital transformation objectives acrossfunctions and provide consistent assessments
and incentives
43

Enablement with
cutting-edge IT tools

Future…
Build IT infrastructure for the digital era•

Present…

•

Enterprise data management platforms to integratevarious data sets and formulate holistic consumer
behavioral profiles
AI-based advanced analytics to support businessdecisions

Enable touch points along consumerpurchase pathway with new tech••

Luxury companies are relatively
cautious to apply new digitaltechnologies in daily operations

Online technology: agile trial of innovative online
interaction and ways to sell, i.e. Mini Program
Offline in-store technology: build more unique andprestigious in-store experience using digitaltechniques, i.e. RFID, AR/VR experience, productinteractions based on facial recognition

Achieve internal operation efficiency•••

Purchasing: smarter online/offline stock mgmt anddemand forecasting
Marketing: more precise resource allocation andcontent creation
CRM: better consumer segmentation and more44
customized services

Authors of "2019 China Luxury Digital Playbook"

JavierSeara

AngelaWang

Olivier
Abtan

NicolasDe Bellefonds

SarahWillersdorf

Partner and Managing
Director

Partner and Managing
Director

Partner and Managing
Director

Partner and Managing
Director

Partner and Managing
Director

Roger Hu

Stefani Bai

Andy Jiang

Stefan Huang

Project leader

Consultant

Consultant

Consultant
45

Thank you
bcg.com46