In the fourth quarter of 2021, the Italian luxury company Ermenegildo Zegna Group launched its “One Brand” strategy to strengthen the recognition of the Zegna brand among consumers and transition towards top-tier luxury.
This brand reinvention journey began in the European and American markets and has gradually unfolded in the China market since this year.
During a recent conference call following the group’s third-quarter financial report, Gildo Zegna, the Chairman and CEO of the Zegna Group, pointed out, “Compared to other significant regions, particularly Europe and the United States, the brand transformation in the China market is slightly behind, but it has exceeded our expectations.“
The direct reason for this “delay” was the impact of the pandemic in the past two years, preventing him and his team from visiting the China market in person. “This year, I have already led the team to China three times,” emphasized Gildo Zegna.
First, let’s look at the brand’s performance in the China market (citing group data):
- In the first three quarters of 2023, sales in the Greater China region increased by 3% year-on-year to 419 million euros (a 20.6% increase at constant exchange rates);
- In the third quarter, sales in the Greater China region fell by 4% year-on-year to 112 million euros (a 5.2% increase at constant exchange rates), indicating a slowdown in growth.
Regarding performance, the group stated that it was basically on par with the same period in 2021, but the underlying brand strength represented by these figures differed. Gildo Zegna believes the current achievements are part of the transformation process, viewing the China market as an undeveloped opportunity and gradually shifting Zegna’s image in the minds of Chinese consumers from being relatively accessible to a true luxury brand (We started moving out the Zegna business accessible price point to a real luxury).
In terms of specific actions, Gildo Zegna revealed that, similar to their approach in the United States and Europe, training, events, store planning, and renovations are top priorities for all the group’s brands, and they are now ready for a 360-degree transformation in China.
According to Tong.Luxe.CO statistics, this year, Zegna has opened boutiques in places like Shenzhen MixC, Fuzhou MixC, Jinan MixC, Lanzhou MixC, Wuhan MixC, Nanning MixC, set up a counter at the CDF Sanya Phoenix Airport duty-free shop, and opened pop-up stores in Chengdu Taikoo Li, among others, making it one of the most active luxury menswear brands offline.
The Zegna Group has also noticed the impact of the Chinese outbound consumer group on surrounding regions. Gianluca Ambrogio Tagliabue, the group’s COO and CFO, said, “Recently, we have seen an increase in purchases by Chinese customers in Asia, especially in Japan, where part of the sales growth can be attributed to Chinese customers buying Zegna’s high-end products in the market. Strong rebounds in sales in Hong Kong and Macau are likewise.“
Tagliabue further pointed out that despite more Chinese people traveling abroad for shopping, domestic consumption in China still dominates for the Zegna Group.
“We are seeing more and more Chinese customers. But for us, we haven’t seen as many Chinese customers outside of the Greater China region as other brands have described. Most of our Chinese customers’ spending still occurs domestically. So overall, we truly believe that Chinese customers will continue to shop locally, rather than around the world.”
| Source: Official financial report, conference call
| Image Credit: Group official website
丨 Reporter： Wang Jiaqi
| Editor: LeZhi