The fashion sector in 2023, shaped by the "post-pandemic era", is characterized by a nostalgic return to brand heritage and a standout practicality in runway designs. Consumer behavior reflects a shift towards more deliberate spending and value for money. The rapid rise and fall of trends in public discourse create an overwhelming "noise", leaving trend-followers disoriented.
Moreover, a significant shift in consumer behavior impacts fashion sales: a preference for in-person experiences, especially for high-value fashion items, as the convenience of online shopping is no longer sufficient against the desire for tangible product engagement.
This shift places immense pressure on online fashion, particularly luxury retailers. An article titled "How far is Farfetch from revolutionizing the online luxury retail market after acquiring YNAP?" by ConCall, lined the operational status of prominent online luxury retailers like YNAP, Farfetch, MatchesFashion, Ssense, and Mytheresa. Notably, Mytheresa is thriving with a 13% increase in Q4 (The reporting period ends on June 30, 2023) GMV to €222 million.
In China, the online luxury retail landscape is transforming rapidly. Despite Alibaba's restructuring, Tmall remains a powerhouse, JD Fashion is on the rise, WeChat mini-programs excel in sales conversion, and platforms like Douyin and Xiaohongshu are finding their footing in luxury brand collaborations.
International online luxury retailers face a challenging journey in China amidst such conditions, which led ConCall to interview Steven Xu, Mytheresa's President for China and the Asia Pacific, to discuss their strategies and operations.
According to the NYSE, Mytheresa's GMV for FY2023 reached €855.8 million, a 15% increase from the previous year. The company anticipates 8%-13% growth in the next fiscal year. Although smaller than some rivals, Mytheresa's success suggests a diverse market that welcomes all scales of business. Sharing Mytheresa's story could illuminate future pathways for online luxury retail.
On October 24, Mytheresa hosted a fashion dialogue at Beijing Mansion Feast by Jingyan, led by Sun Sai Sai and JUJU WANG, discussing art's influence on fashion and their Mytheresa experiences. Steven Xu concluded the event with a private dinner, highlighting Mytheresa's unique VIP engagement strategy.
ConCall's conversation with Steven Xu starts with this exclusive event.
ConCall: This Beijing event was quite different from what luxury retailers typically pursue. What role did Mytheresa play, and what was the purpose of it?
Steven Xu：Mytheresa’s focus has always been on catering to the elite luxury shoppers, offering them unique curated experiences and content that goes beyond what money can buy. Beyond our well-known exclusive capsule collections, the Beijing fashion dialogue and private dinner exemplify the interactive and distinctive experiences we provide.
Luxury consumers often have a strong interest in art, so we invited artists to provide our guests with mental pleasure and inspiration. Serving our core customers well is the greatest display of our value as a platform.
Observers may notice that our offline events differ from the familiar ones, which is due to our differentiated strategy.
ConCall: Speaking of "value", we noticed that Mytheresa mentioned in the opening of its latest financial report that, despite the current difficult market environment, it still achieved sustained strong growth. We are curious: what did Mytheresa do right to grow in adversity?
Steven Xu: There are two main factors to our sustained growth, though not necessarily a source of pride, are indeed the main reasons we have been able to maintain this growth trend.
First, the "top luxury wardrobe consumers'" demand for product exclusivity and personalization is very stable; hence, their consumption and spending are also very stable. It's this stability from the consumer side that allows Mytheresa to maintain growth. In fact, this group, which makes up 3.5% of the total, contributes close to 37.5% of our sales.
Second, although returning to offline is a post-pandemic norm, offline has its shortcomings, such as insufficient inventory, delays in product arrivals, and service capabilities for top customers. Mytheresa's goods come from a global range, with efficient logistics and a "personal shopper" service for top customers, all part of Mytheresa's excellent service system.
ConCall: Your exclusive capsule collections are iconic but appeal more to seasoned fashionistas than to the mass market. As no company wants to limit its growth, how does Mytheresa plan to navigate this paradox?
Steven Xu: Growth is key, and we are continually exploring new avenues. We’ve expanded our offerings from women’s wear to men’s and children’s wear and now to lifestyle and art. Our focus remains on our customers, especially in China, where the number of luxury shoppers is set to increase. This potential growth is also supported by forecasts that online luxury shopping will resurge to over 30% by 2030.
Improving the shopping experience is a priority, exemplified by our successful partnership with JD.com. Their vast customer base coupled with our curated offerings makes for a synergistic relationship, enabling a smoother service experience for our customers.
ConCall: You have emphasized "serving high-end wardrobe consumers" throughout our conversation. Does this mean that Mytheresa will not actively pursue the growing fashion enthusiasts and the so-called "lower-tier market" in terms of maturity?
Steven Xu: We welcome all consumers. We actively engage with emerging shoppers through various marketing efforts, recognizing their growth potential. However, we remain committed to our distinct qualities that resonate with our core clientele, without making adjustments for broader market appeal.
ConCall: With the post-pandemic shift towards physical retail, Mytheresa experimented with a pop-up store in East Hampton. Is opening physical stores a potential new avenue for Mytheresa, possibly in China?
Steven Xu: We're actively experimenting in China. Beyond the Beijing event, we've collaborated with Chinese designers for an exclusive capsule collection and celebrated its debut with special events. Our "style suite" project brings products to Asian consumers, offering hands-on experiences in intimate settings like Hong Kong.
Direct engagement with consumers is key, as Bain reports that the majority of luxury sales are still in-person. While we're considering a long-term offline retail presence, consumer feedback will guide our strategy. Currently, our top customers appreciate the existing interaction model, but we're open to evolving and will share future developments.
ConCall: In light of the unpredictable economic climate, what are Mytheresa’s predictions for the consumer recovery in China?
Steven Xu: Predicting the future is less crucial than focusing on the present. We’ll continue with our exclusive capsule collections, such as our recent Brunello Cucinelli line, which is central to our appeal. Events like the one in Beijing demonstrate our successful consumer engagement, and we plan to carry on with similar initiatives.
The overarching goal is to bolster Mytheresa’s reputation among elite luxury shoppers through enhanced communication and media relations. Our entire company is united in its commitment to investing in the promising Chinese market.