China’s lingerie market comes of age

Tuesday, 26 August 2014
OPINION_ Despite clambering over one another to clothe every inch of Chinese women in terms of outerwear, few international brands have taken the plunge when it comes to intimates, a fragmented and lucrative category with significant growth potential given the speedy evolution of the fashion industry.

Sales of women’s underwear market in China have been soaring since 2008, amounting to 17.8 billion dollars in 2013 and overtaking the US in 2009. While per capita spend per female is still a far cry from developed markets like the US and the UK, it is set to register a 9 per cent CAGR over 2013-2018 compared to 6 per cent for overall womenswear.

Invisible luxury gains traction

Lingerie is a covert luxury, often bought for self-indulgence rather than necessity. In fact, this very perception as an affordable treat has kept sales buoyant despite tough market conditions in Western Europe. This requires an evolved view on decadence, one which requires the mindset of splurging on goods for one’s own satisfaction as opposed to flashy displays of wealth to prove one’s social standing.

The latter has fuelled China’s longstanding love affair with logos. However, this fixation is losing steam following the government crackdown on ostentation but also a general wariness towards the omnipresence of monogrammed items. The devil is in the detail. The growth of contemporary labels like Rag & Bone and Proenza Schouler and the opening of concept stores like Milan’s renowned 10 Corso Como in Shanghai points to a fashion market that is coming of age.

A fragrant approach

Another marker of the growth of invisible luxury can be traced to the fragrances market. While Chinese women are not traditionally accustomed to dousing themselves in perfume, China is expected to be the second most dynamic market for premium women’s fragrances in absolute terms over 2013-2018. Leading the fray, of course, is fashion, with Chanel and Christian Dior contributing to a combined 35 per cent of sales in 2013. Despite there being no interlocked Cs on display, consumers are indeed buying into designer brand fragrances, highlighting a latent desire to buy into luxury for one’s own satisfaction.

Victoria’s Secret appears to agree that the consumption of its beauty products can herald the fate of its lingerie offering. The glamazon of lingerie specialist retailing is testing the waters in China through the launch of its Victoria’s Secret Beauty and Accessories concept store in 2014, where consumers can buy branded make-up, perfumes, body care and personal accessories – everything but underwear.

Sex appeal in an age of innocence

Ironically, Victoria Secret’s no-show in the lingerie market has been to the benefit of local players, namely e-commerce retailer La Miu, which has been christened the ‘Victoria’s Secret of China’. Like its namesake, the e-tailer sells its own branded mid-to-premium priced lingerie. According to Dong Lu, founder of La Miu, the company is not just selling bras but rather “the sexy aspiration to young women who want to be different”.

This is a strategy that clearly works, with the company having delivered solid 200-300 per cent sales growth since its inception in 2008, according to trade sources. Sexy, however, remains a subjective term. In a market where the kawaii aesthetic has long reigned supreme, it is no surprise that La Miu incorporates Japanese influences into its designs. Striking a balance between Western aspirational images and local tastes will be a key challenge for international lingerie brands in this market.

It is telling that willowy Chinese supermodel Liu Wen fronted luxury lingerie label La Perla’s latest campaign. The brand, which first entered the market in 2007, operates standalone boutiques in China’s four main cities of Shanghai, Hangzhou, Shenyang and Beijing, as well as being present in department stores. The brand tilts its focus towards promoting femininity, craftsmanship and a premium experience. This may be more challenging for brands like Agent Provocateur which often endow their products with a heavy dose of seduction.

Better late than never

Shifting consumer perceptions, the relative recession-proof nature of lingerie and a comparatively under penetrated market make women’s underwear a great opportunity for international brands in China. While some currently exist, notably Triumph and Etam, there is still an opportunity for those with a more fashionable rather than functional orientation.

This holds true not just for premium players like La Perla, but also mid-market brands like Victoria’s Secret, Inditex’s Oysho and Fast Retailing’s Princesse Tam-Tam. Failing to act while the time is ripe could see the prospering demand for invisible luxury continue to slip through their fingers and into the hands of nimble local players like La Miu.

Ashma Kunde, Apparel and Footwear Senior Analyst at Euromonitor International, www.euromonitor.com/apparel-and-footwear

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