2013 Digital IQ Index: China - Watches & Jewelry Supplement

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L2′s Watches & Jewelry Supplement to the Digital IQ Index®: China report benchmarks the digital competence of 22 global Watches & Jewelry brands in the Chinese market. This supplement looks at trends and best practices and ranks prestige brands’ performance in China based on 800 data points across four dimensions: Site, Digital Marketing, Social Media, and Mobile.

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2013 Digital IQ Index: China - Watches & Jewelry Supplement

  1. 1. Excerpt Watches & Jewelry Supplement To access the full report, contact membership@L2ThinkTank.comFebruary 22, 2013SCOTT GALLOWAYNYU SternWatches & JewelrySupplement China © L2 2012 L2ThinkTank.com
  2. 2. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.com Ground Zero In the 1950s, Mao highlighted three things every Chinese citizen should own: a bicycle, a sewing machine and a watch. The watch industry has a long and storied history in China. Luxury brand Longines has been selling in China since 1867. In the last decade a culture of gift-giving, and rapid rise in disposable income, has made China the world’s fastest-growing watch market. I n 2010, watches surpassed cosmetics and perfume to become the largest luxury segment in mainland China, accounting for 30 percent of luxury sales totaling 20 billion RMB ($3.15 billion).1 Today, on average, a Chinese millionaire owns 4.2 luxury watches.2 Sales growth Watches & Jewelry: Year-Over-Year China Luxury Sales Growth 45% 2009–2012 Watches Jewelry of luxury jewelry was a robust 22 percent in 2010 and 25 40% percent in 2011. 3 Time Slows 2012 proved challenging. The economy cooled and the 25% perceived link between corruption and luxury watches resulted 22% in a 5 percent year-on-year sales decline in sales.4 Despite the 17% uncertainty, Watch and Jewelry brands continue to open new 12% locations and develop regional collections for China. Bulgari and Tiffany & Co. opened four and six stores respectively last 5% year, and lifestyle brand Hermès opened a dedicated watch boutique in Beijing in July. The recent acquisition of high-end Chinese jeweler Qeelin by PPR and the Chow Tai Fook/Baume 2009 2010 2011 2012 2009 2010 2011 2012 & Mercier distribution joint venture buttress international brands’ commitment to the market. -5% 1. “2012 China Luxury Market Study,” Bain & Co., December 2012. Source: “2012 China Luxury Market Study,” Bain & Co., December 2012. 2. “The Chinese Millionaire Wealth Report,” Hurun Report and GroupM, July 2012. 3. 2012 China Luxury Market Study, Bain & Co., December 2012. 4. “Corruption curbs crimp luxury market,” China Daily, January 17, 2013.© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 2
  3. 3. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.com Abroad Deft marketing in China could have a salutary effect on sales in Hong Kong and Europe. With mainland prices for luxury Location of Chinese Luxury Watch Purchases watches up to 161 percent higher, many purchases are made 5 2009 vs. 2012 abroad. Just 37 percent of Chinese luxury watch purchases Mainland China Hong Kong/Taiwan/Macao Europe Japan/Korea Southeast Asia Other Oversears were made on the Mainland in 2012, down from 64 percent in 2009. Meanwhile, the European purchases exploded from 5 3% 6% percent in 2009 to 25 percent last year.6 2% 3% 6% 5% 10% The Digital Opportunity 37% With 70 percent of Chinese luxury consumers beginning their purchase online,7 digital is the tip of the purchase 2009 vs. 25% 2012 spear in China. However, many Watch & Jewelry brands 41% 64% have not adapted their marketing efforts to the needs of the increasingly global Chinese consumer. The category 51% is hamstrung by torturous load times, anemic Sina Weibo communities, poor visibility on search, and weak brand buzz. Ninety-five percent of Watches & Jewelry brands have international store locators, only half allow customers Source: “Global Reach of China Luxury,” KPMG, January 2013. to add products to wishlists. Merely three brands display pricing (only Chow Tai Fook and Swarovski in RMB) and less than a fifth feature China-dedicated customer service. Although third-party BBS online watch forums are vibrant through Chinese B2C behemoth Tmall. The jeweler saw greater return on digital investments. Like the medium we are communities, many brands are absent. online sales triple in the first half of 2012.8 assessing, out approach is dynamic. Please reach out with suggestions to improve our methodology and findings. You Evading E-Commerce Digital IQ = Shareholder Value can reach me at scott@stern.nyu.edu. Fears of counterfeiting and theft, and struggles with This report is a supplement to our 2012 Digital IQ index®: pricing have kept most Watches & Jewelry brands on the China and attempts to distill trends, best practices, and case e-commerce sidelines. While foreign brands hesitate, Hong studies in the Watches & Jewelry category in China. Our aim is Kong-based Chow Tai Fook is selling online, on its site and to help brands identify strengths and weaknesses and achieve Scott Galloway Professor of Marketing, NYU Stern Founder, L2 5. “Revisiting The Luxury Market In China,” Li & Fung Research Centre, March 2012 citing the University of International Business and Economics in China. 6. “Global Reach of China Luxury,” KPMG, January 2013. 8. “Chow Tai Fook banks on e-commerce, 12 mln marriages per year,” Reuters, November 29, 7. Ibid. 2012.© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 3
  4. 4. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comAbout the Ranking The Methodology 30% 30% 20% 20% Site Social Media Mobile Digital Marketing Localization of Site Features Brand Presence, Community Size, Content, Compatibility, Optimization, and Search, Digital Media, and Email Marketing Technology: Load Time, Hosting Location and Engagement Marketing on Smartphones, and Tablets Efforts Customer Service & Store Locator SNS: Mobile Site: Search: Product Page Sina Weibo, Tencent Weibo, Kaixin, Renren, Douban Compatibility, Functionality, Transaction Traffic E-Commerce & Checkout Page Size & Growth Capability Web Authority Integration of Chinese Social Media Post Frequency SEO & SEM: Baidu, So.com, Google iOS Applications (both iPhone & iPad): Innovation: Product Customization, BBS/Microsites, Reposts & Comments Availability, Popularity, Functionality Advertising & Innovation: Category-Specific Functionality Tabs & Applications Online & Offline Synergies, Cross Platform Engagement Rate Android Applications: Initiatives, Emerging Social Platform Adoption Availability, Popularity, Functionality Video Sites: (WeChat, Meilishuo & Mogujie, iQiyi, Jiepang)
 Youku, Tudou BBS, Social, and Baidu Buzz: Views Mentions, Average Daily Searches Number of Uploads View & Subscriber Growth Email: Viral Videos Frequency, Language, Content, Chinese Social Media Integration Note: Brands were scored based on effectivenees on platforms they participate on Digital IQ ClassesGenius  140+ Gifted  110–139 Average  90–109 Challenged  70–89 Feeble  < 70Digital competence is a point of Brands are experimenting and innovating Digital presence is functional Limited or inconsistent adoption of Investment does notcompetitive differentiation. Successful across their site, mobile, traditional and yet predictable. Efforts are mobile and social media platforms. match opportunity.multi-channel, digital campaigns; functional emerging social media platforms. often siloed across platforms. Sites lack inspiration and utility.sites that cater to local needs; strong socialpresence and integration across platforms.© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 4
  5. 5. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comDigital IQ RankingGeniusRANK     BRAND DIGITAL IQ GENIUS Genius Chow Tai Fook1 GIFTED Cartier Launched loyalty program in AVERAGE 151 January 2012 across online, offline, and mobile. Swarovski Tiffany & Co. CHALLENGED Jaeger-LeCoultre Van Cleef & Arpels Chow Tai Fook Jewellry Group Raymond Weil IWC Schaffhaunsen FEEBLE Bulgari Omega Rolex Longines Piaget Montblanc TAG Heuer Hublot Pandora De Beers Vacheron Constantin Harry Winston Baccarat Patek Philippe Launch of multichannel e-commerce strategy boosts ranking. M-commerce site and apps for smartphone and tablet.© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 5
  6. 6. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comDigital IQ RankingGifted, Average, Challenged, FeebleRank BRAND DIGITAL IQ DESCRIPTION Rank BRAND DIGITAL IQ DESCRIPTION GENIUS Gifted Feeble Chow Tai Fook “Destinée” and “L’Odyssée” short film transcend GIFTED2 110 9 66 Customer service is limited to webform Cartier borders AVERAGE Richemont LVMH Swarovski Tiffany & Co. Average CHALLENGED Strong social, mobile, and digital campaigns, but Jaeger-LeCoultre3 106 9 66 Popular Youku channel is bright spot no e-commerce Van Cleef & Arpels Raymond Weil Swarovski The Swatch Group IWC Schaffhaunsen FEEBLE Bulgari Chinese version of “What Makes Love True” lets Omega4 98 fans tag their initials on a Shanghai map, and 9 66 Icon is all but absent from Chinese social media Rolex challenges consumers to write poetry Longines Tiffany & Co. Rolex Piaget Montblanc Challenged TAG Heuer UGC contest encourages users to upload Hublot Product customization and mobile optimization Pandora5 92 12 65 pictures of themselves trying on a Longines moves brand up ranks De Beers watch and drives traffic to stores Vacheron Constantin Richemont The Swatch Group Harry Winston Baccarat Patek Philippe Page on iwatch365 BBS features product and Contest on iwatch365 BBS for a trip to6 88 heritage content and promotes brand’s social 13 61 Switzerland properties Richemont Richemont Well-designed iOS apps feature advanced watch Partnered with Jiepang to drive traffic to in-store7 84 14 58 finder and store locator, but are not in Mandarin photo exhibition Raymond Weil Richemont Custom tab on Sina Weibo promotes new Mobile version and app launching soon of8 73 14 58 Beijing flagship store brand’s Hao Shi Zhi online magazine Richemont LVMH© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 6
  7. 7. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comDigital IQ RankingFeebleRank BRAND DIGITAL IQ DESCRIPTION GENIUS Feeble Chow Tai Fook Solicited questions via Sina Weibo for offline GIFTED16 57 Cartier Q&A with CEO AVERAGE LVMH Swarovski Tiffany & Co. CHALLENGED Strong online design tool, but site lacks ability Jaeger-LeCoultre17 55 to share products via Chinese social media Van Cleef & Arpels Raymond Weil Pandora Group IWC Schaffhaunsen FEEBLE Bulgari Attracting buzz on video sites, but no brand Omega18 41 Rolex channel Longines LVMH Piaget Montblanc TAG Heuer Hublot Chinese Hour Lounge suffers from poor Pandora19 40 engagement De Beers Vacheron Constantin Richemont Harry Winston Baccarat Patek Philippe Flash-heavy site lacks basic functionality and20 30 fails to render Chinese characters Harry Winston Sina Weibo page launched in May suffers from21 29 infrequent posts and just over 200 fans Baccarat22 27 Digital investments do not foot to brand equity Patek Philippe© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 7
  8. 8. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comKey Findings Digital IQ Distribution Feeble Watches & Jewelry Nearly two-thirds of the Watches & Jewelry brands are November 2012, n=22 Feeble, and the category is the second weakest online in luxury. Only Chow Tai Fook landed in the Genius ranks, and 64% Cartier was the lone representative in the Gifted class. Richemont outpaces Swatch and LVMH with the highest 14% 14% multibrand enterprise IQ, largely because of Cartier’s “Gifted” 5% 5% performance, but its digital efforts are siloed across the organization, resulting in a 70-point disparity across seven Genius Gifted average challenged feeble >140 110 –139 90–109 70–89 <70 brands. All LVMH Watches & Jewelry brands fell into the Chow Tai Fook Cartier Swarovski Jaeger-LeCoultre Bulgari Montblanc Vacheron Feeble category, with the average Digital IQ lagging the Constantin Tiffany & Co. Van Cleef & Arpels Omega TAG Heuer group’s Fashion and Beauty brands by 57 percent. Raymond Weil Rolex Hublot Harry Winston IWC Schaffhaunsen Longines Pandora Baccarat The biggest winner this year, Van Cleef & Arpels, rose Patek Philippe Piaget De Beers 49 percent from Feeble to Challenged, with the launch of a localized microsite and aggressive digital experimentation on third-party BBS. Meanwhile, Hublot fell 38 percent, from China Dispersion by Ownership Watches & Jewelry Digital IQ Challenged to Feeble, after failing to create brand buzz in November 2012 China despite collaborations with Han Han, the most popular 140 Chinese blogger/writer, and soccer star Diego Maradona. GIFTED 130 The brand’s Sina Weibo page has only 15,000 fans, far below the category average of 65,000. 120 Range 110 70 AVERAGE 100 90 CHALLENGED AVG IQ 80 75 Range Range 70 AVG IQ 1 25 66 60 AVG IQ 56 FEEBLE 50 40 30 Richemont The Swatch Group LVMH n=7 n=2 n=4© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 8
  9. 9. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comKey Findings Social Media Watches & Jewelry brands are present on an average of 2.4 social platforms, with 59 percent on both Sina Weibo and Youku. Eighty percent of the brands maintain a video channel on either Youku or Tudou, and 18 percent are on both platforms. Chow Tai Fook and Swarovski are active on more than five platforms, while Patek Philippe and Vacheron Constantin are the only brands with no social presence. Social Media Adoption Percent of Watches & Jewelry Brands Present on the Following Platforms October 2012, n=22 82% 68% 32% 18% 14% 14% 5% Sina Weibo Youku Tudou Douban Kaixin Tencent Weibo Renren© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 9
  10. 10. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comKey Findings Mobile Chinese Mobile Site Implementation Sixty-eight percent of Watches & Jewelry brands have iPhone Watches & Jewelry apps on the Chinese iTunes. While 63 percent of these apps October 2012, n=22 are available in Chinese, only half have been rated. Just four brands have Chinese-language dedicated iPad apps, and all of them have been rated 4 or better. Tiffany’s Engagement 23% Non-HTML5 36% Mobile Optimized Ring Finder app is one of the few to gain traction with Chinese consumers. Android now dominates the Chinese mobile space, controlling 90 percent of the smartphone market.9 However, only 32 percent of Watches & Jewelry brands have an Android app and just four apps are available in Chinese. Chow Tai Fook’s Android app is the only e-commerce- enabled app and it is widely distributed on five Chinese Android stores. Seventy-two percent of Watches & Jewelry 36% brands are mobile optimized or HTML5. 5% HTML5 Broken site/Flash Rated more than 150 times, Tiffany’s Engagement Ring Finder app is one of the few to gain traction with Chinese consumers. 9. “Analysys data: 2012Q3 China’s smart phone market Android system accounted for 90.1%,” Analysys International, November 13, 2012.© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 10
  11. 11. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comTable of ContentsClick Logo to ReturnClick to Go To: 5 Methodology 9 Key Findings 20 Flash of Genius 9 Feeble 20 Chow Tai Fook: Multi-Channel Commerce 6 Digital IQ Ranking 10 Site: Limited Localization 21 Swarovski: Sparkling Secrets 6 Genius 11 BBS 22 Cartier: Chinese-Language Video 7 Gifted 12 Social Media 23 Bao Bao Wan: Clicks Not Bricks 7 Average 13 Sina Weibo 7 Challenged 15 Video 24 L2 Team 7 Feeble 17 Other Social Media Platforms 18 Search 25 About L2 19 Mobile© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 11
  12. 12. Digital IQ Index®: China Excerpt Watches & Jewelry Supplement February 22, 2013 To access the full report, contact membership@L2ThinkTank.com Watches & Jewelry Supplement For Sole Use of: name@company.comAbout L2 ? L2 is a think tank for digital innovation. Upcoming Events L unc h :   M obile and tablets We are a membership organization that brings together thought leadership from academia and industry to drive digital marketing innovation. February 26, 2013 · Paris L U N C H :  H A I R R esearc h February 27, 2013 · New York Digital IQ Index : The definitive benchmark for online competence, Digital IQ Index reports score brands ® ® lunc h :  mobile and tablets against peers on more than 600 quantitative and qualitative data points, diagnosing their digital strengths February 28, 2013 · London and weaknesses. L U N C H :   A PA C & C H I N A L2 Collective®: Series of benchmarking reports designed to help member brands better understand resources, March 14, 2013 · New York human capital, budgets, and priorities supporting digital strategies. clinic :  social cRm EVEN T S April 4, 2013 · New York Forums: Big-picture thinking and game-changing innovations meet education and entertainment. The largest gatherings of prestige executives in North America. 300+ attendees Upcoming Research Clinics: Executive education in a classroom setting with a balance of theory, tactics, and case studies. D igital I Q I nde x ® Re p o rts : 120 –180 attendees Hair Beer Working Lunches: Members-only lunches led by digital thought leaders and academics. CPG: Personal Care Topic immersion in a relaxed environment that encourages open discussion. 40–80 attendees r esea r c h su p p lements : China: Fashion c on su lting Hair: Europe Advisory Services: L2 works with brands to garner greater return on investment in digital initiatives. intelligence r e p o rts : Advisory work includes Digital Roadmaps, Social Media Strategy, and Organizational Strategy engagements. APAC MEMBER SHIP Video Platforms For membership info and inquiries: membership@L2ThinkTank.com© L2 2012 L2ThinkTank.com. For sole use of name@company.com. Circulation of the report violates copyright, trademark and intellectual property laws. 12
  13. 13. Excerpt Watches & Jewelry Supplement To access the full report, contact membership@L2ThinkTank.com A Think Tank for DIGITAL INNOVATION51 East 12th Street, 2nd FloorNew York, NY 10003 © L 2 2013 L 2 ThinkTank.com Reproductions ProhibitedL2ThinkTank.com This report is the property of L2 Think Tank. No copyrighted materials may be reproduced, redistributed, or transferredinfo@L2ThinkTank.com without prior consent from L2. L2 reports are available to L2 Members for internal business purposes.

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