Interview with VELVET CEO Patrice Nordey: Digital Strategy for Fashion

On November 6th, 20 young professionals gathered in an intimate setting at 10 Corso Como on West Nanjing Road, to participate in a lively discussion regarding Digital Communication trends in China. We were pleased to invite our guest speaker, Patrice Nordey, Founder and CEO of the Shanghai-based digital communication firm VELVET.

Patrice is a digital veteran with over 15 years of e-Commerce experience across Europe and Asia, and consults with international companies in the deployment of their Digital Marketing & Communication, Social Media, and e-Commerce strategies in China. He has consulted for L’Oréal, Richemont, Lane Crawford, Galeries Lafayette, Lagardère, Converse, Christian Louboutin, Hermès, Yves Saint Laurent, Dior, Kering and Puma.

Question 1: What type of agency are you and what kind of clients are you working with?

On one hand we serve as an agency, so we help clients execute communication and marketing content to their consumers, and on the other hand we work a lot on actually strategy for our clients. What makes us unique is that we are able to combine these two under one roof. We found that it was very difficult to advise on something like social media, if you have never operated your own accounts or executed a communication plan yourself. This has allowed us to work on both strategy and communication with most of the largest international luxury companies with operations in China.

Question 2: What keeps you awake at night?

The digital industry is very unstable and is constantly changing, so you really need to understand that the knowledge or techniques you know now, may actually be irrelevant in a few months. To last in this industry, you must continue to adapt your skills and update yourself on the most recent trends and technologies. Being flexible is also very important. Sometimes what you believe is not always true, so you need to be flexible and be willing to try new applications or methods, even if you are not comfortable with them yet.

Question 3: How do you see the Digital Landscape in China right now and over the next couple of years?

That’s very difficult to predict, however, I truly believe that we are only in the beginning stages of the digital industry in China. I have now been in China for over 10 years, and this is the first year that I’ve seen my clients look to China not just as another market, but instead as a center of innovation for digital communication strategies and technologies. They come here for inspiration, which is really encouraging to see.

I had a case in June, where a CEO of a global insurance company brought the top 200 executives of his firm to come to China for one week. During their time here, we spent two full days dedicated to helping them understanding the Chinese market, local entrepreneurs and startups, and the most recent trends in digital media and communication.

This is the first time that China has become the global destination for innovation, which is quite interesting and exciting to be part of.

Question 4: What type of skills, knowledge and attitude are you looking for when hiring new employees?

Let’s start with attitude. I think it’s very important to be a self-learner, because what you know now may be used less tomorrow, so you need to have the appetite for self-development and growth. I also think passion is a great engine; it will drive you to where you need to go. So when we recruit people, we try to look for people who are not only skilled in digital technologies, but also very passionate about digital media. In this industry, you can’t wait for people to come and give you facts or ideas, you need to go out and find them yourself.

In terms of skills, we always look for people who have relevant experience in digital communication. That way, when they come to work for us at Velvet, we can solidify their understanding of the first pillar of digital media, which includes Social Media, event advertising, CRM, e-Commerce and account management. Once you have solidified the first pillar, you can focus on the second pillar. The second pillar may be data analytics or another field that requires a deeper level of understanding.

To be an expert Digital Marketer, and to really progress in your career, it is essential to have a solid understanding and foundation in the first pillar. Only after this foundation has been developed, will you be able to become a consultant or advisor.

Question 5: Is there any role within the industry that you think is hard to find talent for?

I would definitely have to say digital strategy. From my perspective, there is no such thing as digital strategy, only strategy. I always tell my staff, we have one strategy, so how can digital support this overall strategy. So finding someone who can understand the overall strategy of the firm we are working with, and then successfully implement a digital strategy to complement the existing strategy, is the most difficult person to find.

Question 6: Any advice for people trying to enter the industry?

You should always follow your passion. There is nothing worse than trying to do something because you parents told you it will be good for your career. Secondly, it’s a very competitive world, so being ambitious and hardworking will take you a long way in your career.  To become successful requires a lot of work and there is no secret to becoming successful in the digital industry other than hard work.  Lastly, preparation is very important in this industry. I tell all my employees to start work early in the morning so that they are fully prepared for any questions our clients may have at the beginning of the day.

Question 7: What do you think is the next step for Luxury e-Commerce in China?

In China at the moment, very few luxury brands actually have their own e-Commerce platforms, over 90% of all luxury goods are sold on third-party applications or platforms at a discounted price. The goods are bought typically by a wholesaler and then sold online in China. So moving forward, the question is:  will there be a full-price luxury e-Commerce market in China.

A few years ago, one of the largest luxury department stores in the United States tried to launch a luxury e-Commerce platform in China, offering high-end luxury products from around the world at full-price. It took them over a year to launch the platform, and within six months of the launch, the business was closed.

This e-Commerce model already exists in Japan, Europe and the United States, but it will take some time before China is ready to accept this model, and only on certain conditions.

First, the company operating the e-Commerce platform needs to have an inventory of luxury products, which are relevant to Chinese consumers. Secondly, luxury companies need to work on creating a full lifestyle experience for their customers, not just selling products online.

Question 8: In China, WeChat is a very powerful and useful app, yet many foreigners outside of China have no idea that it exists. Do you think it would be better if everyone used the same social media platforms?

Social Media is a social tool and every culture and country has a different way of communicating. A platform like Facebook is used differently in the US, Japan or Indonesia, so I feel that we will still have this fragmented market for some time. However, this is not necessarily a bad thing. To have a few large monopolies controlling the social media industry would definitely hurt innovation and creativity.

For example, in the late 90’s, one of the first social platforms was launched in Korea called Cyworld. It included something similar to a Facebook page, a place to listen and download music, and other functions that we have on our modern day social platforms. This platform drove a lot of innovation and inspired many other social platforms that we see today.

Regarding the global exposure of WeChat, the reality is that Chinese people are traveling more and more each year. Last year 100 million Chinese travelled abroad, by 2020, that number will rise to 200 million and the average traveller will spend more than three times what the average traveler spends now. Every time a Chinese traveler visits a foreign company, they bring WeChat with them.

(Interview originally published here.)

VELVET presents at Cashmere World Forum

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VELVET Group Founder and CEO Patrice Nordey recently spoke at the Cashmere World Forum which took place from October 5 to 7 at the Hong Kong Convention & Exhibition Centre. China is home to one of the biggest luxury markets, as well as 95 percent of the world’s supply of pure cashmere.

Nordey presented on how to reach China’s new generation of luxury consumers through digital marketing and e-commerce. Below are excerpts of the talk, as featured in a Jing Daily article on the forum:

“Digital is here to communicate but also to sell products,” said Nordey, who discussed the importance for luxury brands of “designing the consumer journey” through various touch points that include a mix of online and offline platforms. O2O strategies are especially important for luxury brands, he said, as “omnichannel is really becoming the new normal.” He outlined three key goals for an O2O strategy: increasing store foot traffic, enhancing point-of-sale experience, and sales conversion. A key way to enhance O2O campaigns for luxury brands is through WeChat, which “is really changing the digital landscape in China,” he said. The multitude of functions being added to WeChat, including payment systems, means the platform is “really starting to be a Swiss army knife.”

In addition to social marketing, e-commerce is also crucial for reaching Chinese consumers. According to Nordey, Chinese consumers’ above-average interest in buying fashion online means that the cashmere industry should be especially focused on e-commerce. “If you look at every market, the first category is consumer electronics,” he said. “In China, the first category is accessories, fashion, clothing—this is the first category. This is what people are buying online.”

(Read the full article here.)

Challenges Magazine – Luxury Sales Overcomes Anti-corruption Measures in China

Campaigns against valuable gifts and purchases paralyze apparatchiks. But consumption patterns evolve.

Galeries Lafayette Beijing

Galeries Lafayette, Beijing. The well-known Parisian department store opened in mid-October occupying more than 30,000 square meters of retail space. Evidence shows that large luxury groups still rely on the Chinese market.

How much bribes, kickbacks, and gifts in kind are received annually by China’s officials, politicians and managers of state companies? Answer: it amounts to a mountain full of cash. In 2011, China’s central bank estimated, the sums diverted over the last twenty years summed up to more than 95 billion euros, so about 5 billion a year. Staggering.

Former Prime Minister Wen Jiabao noted that this evil has become “the greatest threat to the ruling party”, and its new leader Xi Jinping expressed that this is a war with no rest towards the millions of corrupt members. The system executives are banned from purchasing jewelry, high-end wine, and luxury leather goods with public funds. Also, they are barred from receiving presents with high monetary value, even though gifting is fundamentally rooted in the culture of the country and its business practices.

All that glitters and blings have been suppressed and perceived as a disgrace due to the new government regulations that have been passed recently. Even ministers store their gold watches – accessories they are crazy about, which represents 40% of Chinese luxury goods – on field trips to keep a low profile. A watchword against luxury already arises for large international brands, while China is expected to account in 2015 at least one third of the global market, estimated at nearly $ 175 billion, according to a study by McKinsey.

Previous drop in sales

During the Chinese New Year in February, a few months after the official launch of the anti-corruption campaign, “luxury goods spending dropped to $830 million, or – 53% compared to the previous year,” says Patrice Nordey, CEO of VELVET GROUP, a digital consulting agency based in Shanghai.

“Receptions and banquets have been cancelled, leaders have been indicted, Rolex watches and ostentatious Hermes hand bags have been banished from the media landscape. The anti-corruption campaign has had a real and noticeable effect on the sales of the luxury groups”.

However, most officials refuse to make a connection between this campaign and the fall of their sales.

“In reality, the slowing down already started since 2010, which was well before the anti-corruption measures. We observe a general slowing down in the growth of the luxury retail market in China, from an 18 % growth in the first quarter of 2010 to a less than 14 % growth in the first quarter of 2013”, adds Patrice.

Consequences: after years of strong growth over the last decade, large luxury conglomerates like LVMH and Kering select their new store locations more carefully within the 3000 shopping centers in the country and have taken measures to completely freeze new settlements stores.

Democratized consumption

Should we be alarmed that French houses rely on China as a growth driver? Not necessarily. Evidence shows that the dynamic is still there. Galeries Lafayette has just opened a store dedicated to fashion that covers 30,000 square meters in one of Beijing’s most popular neighborhoods near  Shin Kong Place, the luxury hotel in the created from scratch in 2007. This is the place to be. Chanel, Gucci, Prada , Armani, Italian and French ready-to-wear brands, more than 900 premium brands, the greatest wine brands in the world , rivers of diamonds … all this has generated a turnover of 6.5 billion Yuan (780 million Euros) in 2011. This has made it the most profitable luxury shopping area (excluding real estate and automobile) in the country. Nick Debnam, Asia-Pacific president of consumer markets with KPMG branch, expresses that the luxury sector “is not in recession,” despite a slowdown.

Online Sales Luxury Market China

In 2015, Online sales is expected to represent 10% of the luxury market in China (Source: iResearch).

“The growth drivers are still there and consumption patterns are changing,” he insists. In fact, luxury is no longer reserved for only Party apparatchiks or large fortune makers in the country. Nearly three-quarters of the 80 million Chinese tourists who travel the world each year now return with luxury purchases which they buy at a price 20-30% cheaper than in China. Their favorite shopping destinations include Hong Kong, Japan, Switzerland and France. The average Chinese consumer’s shopping expense has increased to 1,500 euros, which is far higher than that of the Russians and Indians. Thus, luxury groups have put in place some comprehensive strategies to serve Chinese customers not only “in China, but also in their stores in Paris, Milan and Geneva,” says Patrice Nordey.

Boom on Internet

Luxury stands out on the Chinese Web – China ranks as the biggest market for e-commerce worldwide, before the United States. Estimated at 1.35 billion Euros in 2011 in the former Middle Kingdom, the e-luxury market has indeed jumped 70% last year with a total 2.3 billion Euros of online spending. It is expected to exceed 5.5 billion by 2015, according to iResearch Chinese cabinet, and thus capture 10% of the local luxury market. “The anti-corruption campaign will not change the situation,” said Wang Jun, a Beijing blogger.

This strong growth of online luxury disrupts traditional models, offering “the possibility of exploring brands on your iPad, via social networks such as Weibo, Wechat or P1. Consumers have the option to buy luxury goods and have them delivered straight to their home through online retailers such as Yoox, Glamour Sales, and Shangpin”, explains Patrice.

Is China the new continent for luxury? Despite the impact of the current campaign that targets the “rogue cops” Party, opportunities remain “for brands that manage to adapt to this new context.”

Article by Pierre Tiessen.

Marketing to China – 5 Questions with Patrice Nordey, Founder of VELVET Group

Velvet Introduction

1 What is Velvet’s story and what are the services it offers to its clients?

VELVET is a digital consulting agency based in Shanghai specializing in the deployment of communication strategies and online marketing, as well as e-commerce activities and structure for the Chinese market. We cater to international luxury, fashion and cosmetic brands. VELVET’s clients include Boucheron, the famous jeweler in Place Vendome, Galeries Lafayette department stores, brands from L’Oréal or Kering (ex-PPR) one of the largest luxury groups (Gucci, Bottega Veneta, Balenciaga, Saint Laurent, etc..) and lifestyle brands (Puma, Volcom, Electric, Cobra).

Our main playground is the Chinese market, though our customers are international. This has led us to realize missions in Paris, New York, Melbourne, Hong Kong and Florence during the past year. I [Patrice Nordey] launched VELVET after six years of experience in China. It is the result of my first digital adventure started in 1998 with the founding of French online magazine Neteconomie.fr, which was later sold to a sizable media company.

 

2 What is the real reason that inspired you to start your company in Shanghai?

Creating VELVET is the willingness to reconcile two distant worlds, luxury and digital (internet and mobile). The Chinese market has become since this year, the largest market in the world of e-commerce (ahead of the United States) and the most important consumer market for luxury goods and services. We are betting that a position in strategic consulting in this segment will bring tremendous value to the market. Of course, this is in addition to advertising agencies like Publicis-Omnicom, WPP, Dentsu, Aegis Group and more specialized agencies which have greatly strengthened their presence in the last 5 years.

 

3 What is your vision of the luxury market in China in 2013?

China’s market represents 25 % of this year’s global luxury market and remains very strong, despite a slowdown since 2010. This makes it the most attractive market for luxury brands. Moreover, it remains highly fragmented and rapidly changing. The share of purchases of luxury goods by Chinese traveling abroad, including France, for example, is the most dynamic component. Consumers are slightly tired of traditional luxury brands and are more in favor of “affordable luxury” and dynamic premium brands. Sophisticated clientele take a closer look at more specialized brands such as Christian Louboutin or Maje that arrived in China this year. Chinese consumers browse on their smartphones and iPads to discover luxury brands and products, not only at home but also when shopping in store. There is a unique opportunity here to capture and engage customers via social media and other mobile-specific applications.

 

4 What is the most important online social platform for a luxury brand in China today?

No platform is perfect within itself. We recommend Sina Weibo to reach a wide audience, WeChat for more interactive communication and the point of sale, and vertical platforms such as P1 to reach urban and more advanced communities in fashion. This year we worked with BoBo, a mobile social networking app catering to Chinese hairdressers and stylists who want to share new hair styles and styling techniques, with a community of 200,000 professionals. The collaboration between a well-known cosmetic company and BoBo was an effort to target high-end salons and famous hairdressers through an online social network. This collaboration was very effective!

 

5 Why luxury brands are afraid to sell on the Internet today? Are they wrong?

This fear is based on realistic problems: counterfeit goods, parallel distribution, sales of luxury goods at rock-bottom price, and other issues that are prevalent online. Naturally, it would not be a confident environment for luxury brands to launch their products online. However, market conditions are gradually improving, along with an emerging class of consumers who want to live a true online “luxury experience” with their favorite brands. I think the real question for these brands is their degree of integration with the stores, the “OmniChannel” approach, as well as the development of real differentiating services based on a structured approach to CRM. Be able to book a shopping appointment online on the brand site, pick up your purchase in the nearest shop, and have access to services such as VIP concierge through the mobile platform. These are the avenues to explore and to differentiate in order to offer a true digital experience within the luxury industry.

Connexions – A Closer Look on “E-Retail: Luxury Gets Going… Finally!” by Patrice Nordey

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According to a study done by KPMG, 72% of Chinese tourists traveling abroad claim to have bought luxury goods. These purchases represent a significant proportion of their total expenditure (over 40%) with the most popular products of choice as cosmetics, watches and handbags. The prices of these products bought abroad are 20 to 30% cheaper than in China, and account for half of China’s luxury market today.

However, with the rapid development of online shopping in the Middle Kingdom (159 billion Euros at end 2012), we see pure Internet players taking advantage of this lucrative market in the recent years. Startups such as 5lux.com, Ihaveu.com, Shangpin or Xiu.com (87 million turnover in 2012) buy directly from distributors – rarely trademarks – and short all intermediaries to offer prices 20-50% lower than those charged by official channels shops.

Some of these actors, such as Secoo.com, even sell second hand luxury goods while ensuring the authenticity and condition of the product through strict certifications.

To counter these new discount models – which have tremendously opened consumers’ appetite for the “digital luxury” – premium and high end brands fuss to offer their online distribution model to recreate the conditions of an experience luxury with exclusivity, personalization and value-added services.

Upscale cosmetics brands were the first to launch, for example Lancome or the specialized retailer Sephora in 2006. Marni, Armani, Bally, Dolce & Gabbana, Alexander Wang and the Moncler brands have also launched in 2012 under the auspices of the Italian Yoox platform. More recently, Hugo Boss and Coach launched their e-commerce with a narrow range of products. Department stores such as Marks & Spencers and Lane Crawford also accelerated the development of their Internet offerings for their wealthy clients in China and Hong Kong.

Estimated at 11.1 billion RMB in 2011, the e-luxury market in China jumped by 71% in 2012 with 18.9 billion RMB of online spending. It is expected to exceed 45 billion RMB by 2015 according to iResearch and thus, capturing 10% of the first luxury market in the world.

NoFashion – Patrice Nordey insights on Chinese Luxury Market

On September 13, the first digital fashion assembly “Shanghai Fashion Web” will be held in Shanghai, hosted by the luxury digital consultancy agency VELVET Group. Approximately 150 luxury and digital marketing industry leaders have been invited, with speakers including Glamour-Sales China founder and CEO Thibault Villet, Italian luxury online retailer Yoox Group Chinese director Mimi Vong, and the famous fashion blogger & KOL, Peter Xu, who will deliver a keynote speech.

Patrice Nordey

During a NoFashion interview, VELVET Group founder & CEO Patrice Nordey expressed the hope to share mutual insights with participating brands and industry leaders and to discover new partnership opportunities through the Shanghai Fashion Web events. Another goal of the event is to promote the new initiatives in the fashion and digital field, such as the Chinese designer online retailer Bundshop, as well as the hair and beauty interactive platform Hairbobo. The Hairbobo App in China has attracted over 200,000 registered hairdressers.

Patrice Nordey was a senior executive at BNP Paribas Group, and served as the CEO of L’Atelier – BNP Paribas Group China. With 15 years of experience in e-commerce and the digital field, Patrice founded the Velvet Group in 2013 to help international luxury brands to enter the fast-growing Chinese e-commerce landscape.

He stated that in recent years, international luxury brands such as Louis Vuitton, Coach, Gucci enjoyed rapid development in China. However, as the market growth slows down, these brands will come to realize that the use of the digital platform will serve an important role in further brand expansion in China. “The digital platform is not only affordable, but essential to reaching affluent consumers, especially in geographic regions where there is not yet a physical brand store.”

Digital Consulting is the 2013 Shanghai Fashion Web theme and VELVET Group’s principal business, as more and more brands are focusing on digital marketing. Patrice Nordey recommends fashion brands to “prioritize the establishment of a solid digital platform, allocate adequate budget in search, media placement  and social media activities, while effectively channeling offline advertising resources such as magazines, events, and promotional pamphlets.” Patrice Nordey adds that a unified customer experience is essential for the brand. Throughout the digitization process, luxury brands should always maintain its uniqueness to provide high-quality online experience for every customer.

Sina weibo fans

With respect to the authenticity of microblog comments and posts, Patrice said he has noted the recent trend of third party microblog accounts equipped with zombie fans and false information and reviews. “Many brand headquarters have become aware of these authenticity issues and approached brand activities on these platforms with more caution.” Patrice Nordey said that VELVET Group responds to many brand headquarters’ requests, to identify problems within the brand’s Chinese subsidiaries and to “purify” social media activities . VELVET Group currently services clients include from the fashion and luxury industry, including Christian Louboutin, Boucheron, Galeries Lafayette, L’Oreal Group, as well as Gucci, Saint Laurent, Bottega Veneta and other brands under the Kering Group. Patrice Nordey reveals that these fashion brands hope to receive completely objective consulting service from VELVET Group.

With reference to the 2013 Shanghai Fashion Web event, Patrice Nordey signifies that there are many similar events held in the United States and Europe. However, in China, the concept of this event is fresh and “VELVET may be the first company to hold an event that links the digital field with the fashion and luxury industry.”

Note : Shanghai Fashion Web has been held on September 13, 2013 in Kathleen’s 5, Nanjing West Road, No. 325 , 5th Floor, Shanghai Art Museum. Netizens can search #SFW 2013# to find posts related to this event on the micro-blog.

– See more on NoFashion!