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Nicola Mira
Aug 26, 2020
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Alibaba renews efforts to woo Gen Z consumers

Translated by
Nicola Mira
Aug 26, 2020

Chinese e-commerce colossus Alibaba is determined to woo young luxury consumers, seeking to boost sales in the post-Covid-19 period, while rumours are rife about the imminent launch of a website for luxury brands by US giant Amazon. In spring, Alibaba introduced the Luxury Soho luxe e-outlet store, joining the ranks of luxury goods site Tmall Luxury Pavilion, and the group has now further enhanced its services with additional functionalities.

Tmall Luxury Pavilion’s live streaming feature appeals to the younger generations - Tmall

Alibaba's charm offensive aims to “educate, entertain and engage the new generation of luxury consumers,” via a plethora of initiatives under the umbrella name ‘New Luxury’, designed to “strengthen the links luxury labels have with Chinese Gen Z consumers, a directional, digital-native customer cohort that is rapidly becoming one of the driving forces of luxury consumption worldwide,” said Alibaba in a press release.

Among Tmall Luxury Pavilion's new features, there is the Soho Live daily broadcast service, focusing on all things luxe. Soho Mag is instead an online magazine dedicated to the latest fashion news, created in collaboration with industry journalists and influencers. Another new service is a multi-tier customer loyalty programme designed to help labels provide high-level experiences to their most valuable customers.

Millennials, consumers born between 1995 and 2010, are forecast to account for 40% of the luxury market worldwide by 2035, as opposed to a mere 4% today, according to the latest report by consultancy firm Bain & Co. A trend that is reflected on Alibaba's Chinese websites where, according to the group, approximately 80% of customers are aged 35 or younger. Among this young clientèle, the fastest-growing age segment is that of consumers aged between 18 and 25, whose numbers have doubled on Alibaba’s sites between July 2018 and June 2019.
These figures are highly significant for Western luxury labels, and echo the data published by McKinsey & Company, according to which Chinese Gen Z consumers spend on average CNY25,000 per annum - equivalent to approximately €3,000 - in luxury goods, as much as their parents from the generation born in 1965-70.
“By providing Tmall’s unparalleled analytics and insights on luxury consumption in China, we empower luxury brands with a deeper and more accurate understanding of local consumer preferences,” said Mike Hu, vice-president of Alibaba Group and general manager of Tmall Luxury, Fashion and FMCG, cited in the press release. “These insights allow luxury brands to precisely tailor their communications to young Chinese audiences, while staying true to their brand identities,” he added.
Tmall Luxury Pavilion was launched in 2017 and currently hosts nearly 200 luxury and designer labels, among them Cartier, Balenciaga, Burberry, Valentino, Hugo Boss, Golden Goose, MCM, Qeelin, Kenzo, Tag Heuer and Zenith. The Luxury Soho site was created in April, and features, among others, Coach, Theory and Moschino.

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