BrandWatch by Michel Gutsatz

Hong Kong has become the third most expensive city in the world for retail

"Out of China...."

It is with pleasure that I welcome Laurence Ouaknine on BrandWatch. Laurence is the creator of "Au Coeur du Luxe" ("At the Heart Of Luxury"), a company specializing in luxury brand retail based in Paris, Hong Kong and Shanghai. "Au Coeur du Luxe" is one of the partners of The Scriptorium Company - and an important associate for the Asian market.

According to CBRE's latest report published this month, Hong Kong has become the third most expensive city for renting retail space at 974 US$ / m2 a year. New York still ranks first with the most expensive rental rates at 1,725 US$ / m2 a year, followed by Sydney at 1,155 US$ / m2 per year.
Last year, the rents in malls climbed 250% (from 250HK$ to 625HK$ / m2). The record was reached in Causeway Bay in street-level shops, where the price reached a high of 1.800 HK$ / m2 a month. The challenge for luxury brands coveting space in the most dynamic areas in Hong Kong, like Tsim Sha Tsui, Central, or Causeway Bay consists of firstly, being able to find it, and then making it profitable.

Hong Kong is still the most attractive Asian city for luxury brands; 90% of them have been implanted there. This momentum should continue, driven by the number of Chinese tourists who have made Hong Kong their primary tourist destination.
New initiatives flourish in order to attract consumers, who are already in demand. This can be seen in the latest sensory marketing animation currently displayed at the busy Causeway Bay station: when the subway rouses the senses of users.

The subway corridors are generally uninteresting; they are just a series of underground tunnels through which a flow of passengers transit daily, often in a hurry to get out.   

Nevertheless, a brand selling instant noodles decided to make these unloved alleys more attractive by providing users with very appetizing advertising. With their giant stickers, the underground corridors are suddenly transformed into a real supermarket display piled high with the famous noodles and its whole range of flavours.

While you pass by the shelf, you hear the sound of soup being slurped down, followed by the smell of chicken. We find ourselves, not in the subway, but as though transported to a restaurant, at least until the end of the corridor!
The animation is really surprising; it attracts the attention of adults and particularly influences children who certainly will ask parents for the noodles they see, especially if mealtime is near. The sight, smell and hearing of users are attracted, promoting impulse buying, and which is meant to satisfy the five senses, including that of taste.
Poly-sensory marketing is still rare, but is proving to be very successful with young targets, like children. As the subway is an enclosed area, with a high footfall rate it is propitious for this kind of promotion - that one expects will be amplified in the coming years.

Luxury, Craft & Know-how: A Trend Confirmed

It is with pleasure that I welcome Laurence Ouaknine on BrandWatch. Laurence is the creator of "Au Coeur du Luxe" ("At the Heart Of Luxury"), a company specializing in luxury brand retail based in Paris, Hong Kong and Shanghai. "Au Coeur du Luxe" is one of the partners of The Scriptorium Company - and an important associate for the Asian market.

In partnership with the French Chamber of Commerce, Hong Kong just hosted the 2010 edition of "Boutique Boulevard: So Lush, So Central" - the rendezvous event of luxury brands in Hong Kong.
From 14 to 23 May, the most famous brands organized a series of encounters with professionals in luxury who were able to display, to their numerous fans in Hong Kong, their savoir faire, and share their exceptional universe with them.

The event that opened with an evening reserved for the happy few, took place in the most dynamic sector of Hong Kong, the Central District. The itinerary, running through the district, linking the various malls dedicated to luxury brands, allowed one to wander from one boutique to the other and watch the demonstrations:

• A workshop (Scents & Sensibility) proposed by Guerlain and conducted by one of the creators of L'Instant by Guerlain, Ms. Sylvaine Delacourte, showed why and how to wear a fragrance.
• A workshop dedicated to the art of shaving (twice), presented by the barber of the prestigious Mandarin Oriental, Angel Gonzales.
• Advice from the French sommelier, Pierre Legrandois.
• Besides which, a number of brands, from Dunhill and Tiffany & Co to Armani, Cartier, Gucci, along with Louis Vuitton, offered workshops in dressmaking and presentation with tips on fashion and etiquette.
  
  
  

As luxury and art are mutually drawn towards each other, a temporary gallery of paintings and artistic events (flamenco, tap-dancing, jazz) were organized during the event.
This event also echoed the "Savoir Faire Exhibition" held from 30 April to 2 May by Dior in Hong Kong for its new "Rosewood" jewellery collection.

Held for the first time in Paris last year, "the Dior savoir-faire exhibition" helped to firmly establish its unique jewellery pieces as an expression of the expertise and the creative passion of Dior.

Encouraged by the success of the Paris event, three jeweller craftsmen made the trip to Hong Kong this year in order to demonstrate their expertise and display the new Rosewood collection. This collection, designed by Victoire de Castellane, consists of thirteen models and pays tribute to Christian Dior's favourite flowers: the roses from his garden at Milly-la-Forêt.

Where does this obsession for luxury brands to organize this type of event stem from? What advantage do they gain?
This type of 'seduction operation' that presents the savoir-faire of the most prestigious brands is very popular and highly appreciated in Asia. Indeed, with the increasing numbers of Chinese nouveaux riches, luxury brands try to teach their current and future clients about the values on which their reputation in Europe is based. Among these values, craft, expertise, and the demonstrations of the meticulous gestures of skilled workers, validate their legitimacy and the prices practiced by the famous houses.
This display of manufacturing procedures and the immersion in the history and the discovery of the universe of the brand go hand in hand. Once the client has been convinced that the product is well made and of quality, he/she has to be persuaded to adhere to the image of the brand, to what it projects.  This process takes more time than a simple act of seduction, but if it is successful, the loyalty of customers will surely follow and convince them that they have placed their trust in a quality brand that closely reflects their personal values.
Furthermore, organizing commercial operations of this calibre in a group can also attract considerable media coverage and turn Hong Kong into a meeting point for luxury in Asia. In fact, China and Hong Kong are generally very fond of spectacular promotional events that create a buzz. Luxury brands in Asia in fact try to be more imaginative than their neighbour to offer the most popular show of the moment, where one-upmanship is always present.
But, even though luxury brands do not always attract customers immediately in the aftermath of these events, they still would have initiated a few of them. The visitors who turn up out of curiosity, and who do not correspond to the core clientele targeted by the brands, are likely to be fascinated by the universe of a brand and become its customers as soon as they are able. This preliminary approach to a clientele that is less aware also helps to demystify the access to one of these famous luxury brands, often intimidating and somewhat alarming.
European customers are certainly not excluded from the world of handcrafted luxury brands (as the campaigns launched last March by Vuitton and Gucci show), but the approach is different.
It consists, not of justifying the price of an item because of its quality (seeing that the crisis has curbed the spending of some buyers), but of making them aware of the culture of luxury, which is more often the case in Asia. We should also bear in mind that the Vuitton campaign was considered misleading by the Advertising Standards Authority (ASA) in the UK, which estimated that it could lead consumers to believe that its products were made entirely by hand. One has the impression that handmade is used more as a sales pitch for marketing than as a tool for instruction as it is in China.

© Laurence Ouaknine

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