ZURICH (Reuters) - Cartier-owner Richemont is teaming up with Alibaba to try to crack China’s online shopping market, potentially a major growth driver for luxury firms but which has proven difficult to tackle for outsiders going it alone.
The partnership will feature offerings of Yoox Net-a-Porter Group (YNAP), the online retailer now fully-owned by Switzerland’s Richemont, to Chinese consumers, the companies said.
YNAP and Alibaba, China’s biggest e-commerce player, will launch mobile apps in the country for the multi-brand Net-a-Porter store and men’s fashion specialist Mr Porter under a joint venture.
Chinese consumers make up a third of all luxury goods purchases globally, and while many still snap up expensive watches, jewelery and clothes on overseas trips, shoppers are increasingly spending at home, encouraged in part by an leveling out of prices, which used to be much higher in China.
That business is shifting online, pushing luxury manufacturers to consider alliances in a market where customers rely on local social media apps and retail platforms such as Alibaba’s Tmall or Taobao.
“Quite frankly there’s not a luxury goods group in the world that can catch up with where Alibaba is at in terms of so many of its ecosystems,” Richemont Chairman Johann Rupert told journalists.
“It’s sad that all the luxury goods groups are finding themselves with a prisoner’s dilemma, where everybody is fighting each other, when we’re entering a place, a market as vast as China, (where) we simply don’t have the tools.”
Last year China’s number 2 e-commerce firm JD.com invested nearly $400 million in fashion retailer Farfetch to help boost its reach in the market, also through a partnership.
Rupert said Richemont expected a sales boost in the medium term from its deal, though he gave no further details.
Working with Richemont also lends weight to Alibaba’s attempt to carve out a niche in the luxury industry.
It launched specialist site Luxury Pavilion last year, rivaling Toplife, a similar venture by JD.com, and the platform will also host Net-A-Porter and Mr Porter alongside dozens of labels from Burberry to Hugo Boss.
Some brands such as Kering’s Gucci have refused to join up so far, citing concerns over counterfeit goods circulating on Alibaba sites, though Rupert said there was a “very low risk scenario” regarding fakes.
Richemont has beefed up its online presence through acquisitions too, purchasing Britain’s Watchfinder this year for instance, an online platform for pre-owned watches.
Reporting by Michael Shields, John Revill and Sarah White; Editing by Maria Sheahan and David Evans
Our Standards: The Thomson Reuters Trust Principles.