Cartier Strikes Gold in China

Market Analysis
02/07/2021 14:32

Cartier recently shared China was the first market to offer the French luxury goods brand a robust rebound in sales since the pandemic broke out. The brand shared that e-commerce sales in China also saw a phenomenal rise since the outbreak, prompting the company to solidify its plans to raise investments in the country. The rebound and growth are attributed to the solid performance of pandemic-related travel restrictions, causing Chinese consumers to purchase luxury goods locally rather than abroad.

"COVID-19 has changed market dynamics, but China is continuing its growth. We can see that it has been an accelerator," said Cyrille Vigneron, CEO and president of Cartier International. "We have opened a couple of new stores in China already. Because of the phenomenal growth and number of visitors, the traffic is just enormous, and we are renovating and expanding our existing stores. Sales mostly came from retail, but e-commerce had a very phenomenal acceleration, especially through our flagship store on Tmall, which had fantastic results," he said.

In addition to their official online store on Alibaba's Tmall, where Cartier offers a wide range of jewelry, watches, and leather goods, the brand has launched a WeChat mini-program, which has enabled the brand to interact with customers online. International travel restrictions have also caused a boom in the offshore duty-free and travel markets in the Hainan province. "Among today's visitors, there could be potential customers who may buy jewelry or luxury products in the future. So, prospects for growth in Hainan are really strong," Vigneron said.

Demand for luxury goods in China is expected to rise, which will likely translate into more customers and higher sales for Cartier. Compared to other countries, Cartier said its customers in China were relatively young. "70% of our Chinese customers are millennials, and 25% are Generation Z customers. We are a younger brand than people think. We have to be relevant to them (millennials and Gen Z), and we have to be on the media platforms they use," Vigneron said. "A lot happens on China's major social media platforms such as Weibo, WeChat, Red, and Douyin. They have their own logic, and they grow super fast. Doing things right in China is important, not because you did it right in Europe or in the United States or Japan. China has its own logic and dynamics that you have to understand and follow."

Consulting firm McKinsey& Co. believe international travel will recover gradually once restrictions are eased, and eventually lifted. "That said, Chinese consumers remain the biggest growth opportunity for the luxury sector. Brands, clearly, will need a new approach to attracting luxury shoppers," said Daniel Zipser, senior partner at the consultancy. Research firm Statista predicts Chinese consumers will spend 1.2 trillion yuan (US$185 billion) on luxury goods by 2025.