Saint Laurent to launch online sales in China

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French fashion house Saint Laurent is launching online sales in China, a major step in the storied brand’s efforts to expand in China’s rapidly growing domestic market.

Saint Laurent Chief Executive Francesca Bellettini said the brand is teaming up with online fashion retailer Farfetch to sell over the internet in China. The brand will sell merchandise on a new online platform recently announced by Farfetch in a joint venture with JD.com, China’s second-biggest e-commerce company.

The announcement marks a cautious foray into China’s freewheeling internet market by one of the most elite brands in fashion. Until relatively recently, luxury firms had been reluctant to sell over the internet in China because of concerns that China’s main online retailers, JD.com and Alibaba Group Holding Ltd., run marketplaces that are riddled with counterfeit goods. Only a few luxury brands have the size to attempt online sales in China without teaming up with either e-commerce giant.

But Farfetch’s partnership with JD.com helped ease concerns about knockoffs, Saint Laurent said.

“Protecting the brand from counterfeiting is fundamental for Saint Laurent,” Ms. Bellettini said in an interview, adding that the agreement with Farfetch would “guarantee to our clients secured purchases in addition to a very efficient service.”

The importance of the Chinese domestic market is overcoming the industry’s concerns about relinquishing some control over physical distribution there. Chinese consumers, who account for 30% of global luxury spending, are increasingly shopping at home — partly the result of efforts by Beijing to block Chinese tourists from bringing expensive merchandise back from abroad.

That means selling to the Chinese consumer in China has become key to the luxury industry’s growth.

Ms. Bellettini said Saint Laurent’s sales to Chinese consumers have surged in recent years despite a slowdown in the global luxury market. Kering Co., which owns Saint Laurent, Gucci and other brands, last week reported that sales rose “sharply” across Asia, “particularly in mainland China.”

“There is this population of millennial Chinese, very well educated, in particular Chinese university students, that are incredibly literate with the brand,” she said.

Saint Laurent has taken a relatively conservative approach to expanding in China. It has only 18 stores in the country, concentrated in Beijing and Shanghai, compared with dozens opened by luxury competitors such as Prada SpA and Louis Vuitton. Ms. Bellettini said the online sales push will help the brand reach customers in smaller Chinese cities without risking overexpansion.

“We will be able to deliver to these locations without a physical store, ” Ms. Bellettini said.

Saint Laurent is pledging same-day delivery in Beijing, Shanghai and Hong Kong. Starting in October, the brand aims to offer delivery within 90 minutes in those three cities.

Luxury firms have had a tumultuous relationship with Chinese e-commerce companies, particularly Alibaba. Kering sued Alibaba in 2015 in federal court in New York, claiming the firm was conspiring with Chinese manufacturers to produce and sell counterfeit versions of Kering brands.

A judge dismissed part of the complaint last August. Alibaba has denied the accusations.

By Matthew Dalton
MarketWatch

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