According to data from Re-Hub, luxury and premium brands saw a 26 percent rise in total revenue on Tmall from April 20th to May 21st versus the same period last year. While May is not a particularly busy shopping month in Western markets, in China it is when one of the biggest gift-giving festivals takes place – 520, also known as “Internet Valentine’s Day”.
With the Chinese market returning to normalcy this year, the luxury industry has been optimistic about the market's rebound. But a more sophisticated and discerning group of customers comes with the maturation of the market.
Brands seeking a foothold in China should adhere to the local playbook – including capitalising on local milestones, such as the aforementioned 520, while understanding their distinct purchasing behaviours and preferences, adopting local social and transactional channels, as they have managed in the past few years.
These local milestones, including traditional festivals and shopping events, provide brands with the opportunity to increase their revenue and share of voice in this market in a short period of time. The majority of players have already adapted their brand calendar here to the China’s time zone.
In the first edition of the whitepaper, we will shed light on “520” – China’s Internet Valentine’s Day. In this paper, we examine the e-commerce and social performance of luxury and premium brands on Tmall and key social media during the 520 of 2023.
Due to the COVID restrictions of the last year, many brands were not able to operate at full capacity around 520. That is why, for the first 520 post-COVID, luxury brands pulled out all the stops to raise their share of voice and drive conversions during this festival, through innovative campaigns that included special products and offline events.
Aside from the uplift in e-commerce, the impact of word-of-mouth also rose this year, with the social performance of User-Generated Content (UGC) associated to our 107 brands’ sample, and generated an impressive increase of 633 per cent compared to 2022.
According to the tradition of gift-giving between couples on this occasion, some gift-appropriate categories outperform others during this period.
“Unsurprisingly the category that benefits the most around Chinese Valentine’s Day is also the one that benefits the most from Western Valentine’s Day – Jewellery. Brands such as Van Cleef & Arpels, Fred, Qeelin and Bulgari all see significant uplifts around the festival,” states Thomas Piachaud, Head of Strategy at Re-Hub.
“This year we have seen necklaces playing a more crucial role within the category – accounting for over 45% of the total Jewellery revenue, Alhambra, Wulu, and Diva’s Dream collections all play key roles in the festival. In the end, jewellery is still the best way to express affection and love in China,” he continues.
In addition to jewellery, we observed that revenue from leather goods and accessories also showed an incremental growth in this 520 when compared to 2022.
The primary challenge for global luxury brands when producing a campaign for local milestones is that their communication and marketing activations can’t be supported by existing global assets. To reach Chinese consumers on their own, the domestic team have to repurpose global content, which rarely works to their advantage or be willing to invest in creating local assets around these milestones.
Given this level of dedication, global luxury companies are hoping that their efforts will pay off in a presentable ROI – that is, pure conversion. This is why, regardless of the milestone, e-commerce channels have come to play a critical role in brand marketing activities. However, this frequency of e-commerce promotion throughout the year puts the brand image at risk of being diluted.
Among our sample, some brands chose only to stimulate sales through commercial tactics such as discounts and promotions rather than launch any 520-themed campaigns to communicate with local audiences this year. These directly increased brand sales but had a minor impact on their social performance.
“The rise of e-commerce has made almost every milestone in China commercial. The biggest challenge for luxury brands is to figure out how to balance between brand building and commercial performance,” opines Pablo Mauron, Partner and Managing Director China at DLG. “For the past two years, e-commerce was approached aggressively as a workaround to the pandemic's impact on traditional retail, but brands now realise the importance of having a more balanced approach.”
In this study, we examine brand performance during the 520 period from two perspectives: e-commerce and social media, in order to present a holistic picture of their 520 activations. And we discovered that luxury brands are leveraging this milestone in a variety of approaches. Furthermore, a few brands – such as Bulgari, Gentle Monster, and Fred – have managed to see an increase in both e-commerce revenue and social performance.
In addition to demonstrating brand performance, this report also delves into strategy for how brands can optimise their asset, planning, and channel strategies to maximise their effort around this festival.
Please download the full report at the link below for full access to the brand performance and additional insights on this year's 520.