Marketers across the luxury goods segment have long been drooling about the potential of a Chinese market with rapidly fattening wallets and an insatiable desire for anything with a high-end label.
The market has come a long way in sophistication and depth since the days when one Shanghai wine distributor was pleased to sell out a consignment of Château Lafite Rothschild, but a little surprised when the karaoke bar that bought the lot was serving it mixed with Sprite.
Richemont’s joint venture with Alibaba aims to get straight to the heart of the market, combining the retail offerings of Yoox Net-a-Porter (YNAP) with Alibaba’s technology infrastructure and back-end support to bring YNAP’s 950 leading luxury brands to Chinese consumers. The plan is to replicate the offline shopping experience by smacking it all into Alibaba’s Tmall Luxury Pavilion, and if it can do this without the expense of all the bricks-and-mortar stores it will be a lucrative venture indeed.
Alibaba brings more than 600-million users to the party. It expects China to be pushing 50% of the global luxury market by 2025, which underlines the importance of this joint venture to Richemont’s brand portfolio.
Alibaba is an interesting choice of name for a brand, given that the original built his fortune by robbing a group of thieves who quartered his brother, so they were all killed off by stabbing or immersion in boiling oil, leaving Ali Baba in possession of their treasure store.
We can but hope that this latest incarnation has a less colourful approach to making money.
There’s ketchup in the streets as the UK’s wildly overtraded casual dining sector charges flat-out into the closing stages of a particularly gory zombie apocalypse script.
Famous Brands joined the party as recently as September 2016 when it decided to treat itself to a burger and ended up paying £120m for Gourmet Burger Kitchen (GBK), in what has turned out to be one of the less auspicious pieces of timing in the company’s long and distinguished history.
GBK dishes up a tidy product at a decent price, but so does everybody else, and the high streets of the nation of shopkeepers are positively groaning with options for the hungry consumer. Add to the mix a toxic cocktail of sky-high rents, sharply increasing business rates, rising food prices and increased staff costs before you even start to consider the impact of Brexit on these establishments’ largely young, European workers, and it’s no surprise that the financial situation is starting to look a little more than precarious.
In the burger sector alone you have Byron closing 20 of its 67 sites and the Handmade Burger Co closing nine out of 20, while Jamie’s Italian and Prezzo have both entered into rescue deals with their creditors that will involve around a third of their outlets closing.
GBK’s company voluntary arrangement is believed to involve the closure of around 17 of its 80 stores, and the restructuring of the remaining property portfolio at more realistic levels in order to give the chain a chance of survival. It’s not the most popular procedure, but it may well be the only hope.
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