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Tmall Chases China’s Gen Z Luxury Shopper

Alibaba’s Tmall Luxury marketplace, the e-commerce giant’s high-end destination for luxury and designer brands, is debuting three new features to seize market share among China’s coveted Gen Z consumers.

The luxury pavilion has introduced Soho Live, a daily livestreaming service focusing on all things luxury, in addition to Soho Mag, a content-rich channel with the latest fashion news jointly developed with fashion editors and trend-setting influencers, and an upgraded membership program offering personalized multi-tiered services to high-value customers.

Livestreaming has blossomed into a 433.8 billion yuan ($62 billion) industry in China, according to statistics from iiMedia Research, a Guangzhou-based media monitoring company. During Alibaba’s 11.11 Global Shopping Festival, livestream shopping played a notable role, with more than half of merchants on Tmall leveraging the medium to push products during the event.

Luxury may typically be seen as a segment comprised largely of older audiences that outpace their peers in terms of income, but China’s Gen Z shopper has bucked that trope. A report by McKinsey & Co. showed that Gen Z consumers in China spend an average of 25,000 yuan ($3,600) a year on luxury goods, already as much as their parents.

Last year, Bain and Co. anticipated that Chinese millennials and Gen Z consumers would account for 45 percent of an expected $400 million global luxury market by 2025, illustrating that Tmall’s push has its merits.

Tmall has been a notable beneficiary of Gen Z’s luxury proclivities, with approximately 80 percent of the customers on the platform ages 35 years or younger, with the highest concentration in the 26-30 age group. And with the number of luxury consumers in the 18-25 age group more than doubling between July 2018 and June 2019, this younger consumer segment is set to become a bigger driver in Tmall’s growth.

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“Being on a digital platform such as Tmall allows Golden Goose to talk to consumers across China about the brand’s integrity, craftsmanship and its versatile range of products and to grow in a way that ensures both quality and quantity,” said Mauro Maggioni, Asia-Pacific CEO of premium Italian label Golden Goose.

It’s not to say Tmall Luxury won’t benefit from other generations as well. In fact, McKinsey and Co. said the country’s consumers already represented one-third of global spending on luxury items in 2018. The firm estimated that China’s consumption of luxury goods will nearly double by 2025 to about 1.2 trillion yuan ($175 billion), up from 770 billion yuan ($112 billion) in May of 2019.

Launched in 2017, the Tmall Luxury marketplace now has nearly 200 leading brands with open flagship stores on Tmall Luxury Pavilion.

The new Luxury Soho channel, launched in April to cater to young value-conscious consumers, has also attracted a “growing” number of brands, according to a statement from Alibaba. Luxury SoHo is designed to help luxury brands move surplus, seasonal stock, giving shoppers discounts on items from the same brands they would find on the Luxury Pavilion.

“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, Alibaba Group vice president and general manager of Tmall Luxury, Fashion and FMCG. “These insights allow luxury brands to precisely tailor their communications to Chinese young audiences, while staying true to their brand identities.”

A Gartner L2 Index released in June last year in noted that 23 of the 45 top global fashion brands it tracked at the time had official flagships on Tmall, including Burberry, Yoox Net-a-Porter, Coach, Givenchy, Valentino, Versace, Isabel Marant and Bottega Veneta. Balenciaga is one of the most recent marquee global brands to join Tmall, launching a store on the platform in May.

On the whole, Tmall helped Alibaba bounce back to pre-Covid levels in the second quarter, with the company’s gross merchandise value (GMV) for online physical goods, excluding unpaid orders, growing 27 percent year-over-year. All major categories expanded at similar or faster rates compared to the December quarter before the start of the pandemic.