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Alibaba to launch Luxury Soho


Alibaba Group Holding Ltd has launched a new luxury platform targeting younger consumers that also aims at helping high-end brands shed excess inventory built up during the global COVID-19 lockdowns.

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Chinese shoppers account for more than a third of global luxury goods spending (Bain & Company, 2018) and China was the first key market to be hit by the COVID-19 pandemic, which forced brands to shut down stores and led to a virtual halt in international travelling.

As the pandemic spread to Europe and the US, Chinese spenders gradually emerged from weeks of lockdown and most labels have been enjoying a recovery in sales there since March. If the so-called “revenge spending” is there to last is too early to say, but more importantly will Chinese spenders start travel again and if yes, when?

Chinese spenders who used to buy mostly when travelling abroad are now only partially spending at home. Informal discussion with brands have indeed confirmed that although there is a recovery, Chinese spenders who used to spend while travelling are not fully exercising their purchase power yet. Among the factors also the fact that buying goods abroad is a matter of experience and not only price.

In a statement, Alibaba said it was piloting the new Luxury Soho platform to run alongside its Tmall Luxury Pavilion flagship site.

The platform will allow brands to run their own online stores with full control over their pricing, product selection and strategy.

Cristina Fontana, Head of Fashion and Luxury Director for Europe at Tmall, said that while Luxury Pavilion would continue to offer the brands’ latest collections and more exclusive services, focusing on a more affluent clientele, Soho would be home to “luxury deals, older collections, timeless classics and vintage collectibles”.

She said the platform would help high-end houses reach newer consumers such as those from China’s lower-tier cities or so-called Gen Z shoppers, young clients up to the age of 25 who are just entering the world of luxury and are expected to become increasingly important for the sector.

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“With Luxury Soho, brands can now move selected products and collections onto an online outlet store and bring them in front of a specific audience.”