Gieves & Hawkes is informing consumers of its product quality with the Woolmark Gold label

Gieves & Hawkes is informing consumers of its product quality with the Woolmark Gold label

The Chinese economic landscape has lost some of its lustre in recent months, as consumer confidence wanes on worries about household finances, employment and prices. At the same time, the country's luxury consumers are becoming increasingly sophisticated - which means brands such as Gieves & Hawkes are having to justify their prices with a strong story about their provenance. Petah Marian reports.

"China is not the straightforward cash cow that it was," Ray Clacher, managing director of luxury tailor Gieves & Hawkes, tells just-style.

A combination of hasty expansion in the country's tier three and four cities, austerity measures, and increasing consumer sophistication means that Gieves & Hawkes is looking for other ways to reach consumers in the country.

Against this backdrop, consumers are increasingly asking more questions about their garments, especially along the lines of "why should I pay US$2,000 for a suit off the rack?" explains Chacher. And this now means "you've got to come up with all of the features and benefits," to justify the price.

Indeed, he says, Chinese consumers crave authenticity. The country's unique position for the past 50 years as the "factory of the world" with its focus on cheaper prices, has made shoppers suspicious.

This means that Gieves & Hawkes consumers now think: "I like the product, I like how it looks on me, I think I know your brand, but how do I know that you're not cheating us?"

The company has responded by becoming one of the first brands to sign up to Woolmark's Gold certification. The labelling scheme applies to merino wool with a fibre thickness of no more than 19.5 microns from Australian Woolmark Gold certified suppliers, which is then spun into fabrics at some of the best wool mills in Europe.

The programme means that Gieves & Hawkes can trace its products "all the way from the sheep to the sleeve," emphasises Clacher, which means, in turn, that consumers can trust its products come from some of the "best sheep farmers in the world".

Describing the programme further, Rob Langtry, head of marketing for Australian Wool Inovation (AWI), said the certification allows consumers to understand that products labelled with the mark use fabrics made using European heritage craft skills to produce a "premium piece of men's or women's fashion apparel".

A more informed luxury consumer
Langtry says Chinese consumers are becoming "much more knowledgeable" and increasingly discriminating in terms of the luxury goods they buy.

"They've been able to purchase luxury goods for some time, but they were mostly bought on brand equity, but now they're buying on brand equity and product quality," he tells just-style.

This is a broader trend seen across the market, and highlighted by the acquisitions made by luxury goods giant LVMH over the past three years.

"What they're acquiring has a strong product base to it; it's not just a retail front," he says, highlighting how Loro Piana, which LVMH recently took a stake in, is almost "fanatical" about the quality of the ingredients it uses.

"The same is true of RM Williams," another brand in which LVMH has a share. The Australian shoe and outdoor clothing label built its "reputation on leather skills, on sourcing the product, and then following that product through from its raw state to its finished state with very strong artisanal skills".

Langtry emphasises: "I see brands going back down their supply chain to ensure that the product supply chain backs up the luxury."

Gieves & Hawkes in China
Speaking about the Chinese economy and Gieves & Hawkes' performance in the country of late, Clacher admits it's not "too rosy a situation at the moment."

According to the Gieves & Hawkes managing director, the last five years have been a "really fantastic time for retail", which meant many brands were "lulled into a false sense that you can do no wrong".

He said the company has faced a "tough" first half, but the country remains its number one market by volume, with the brand operating over 100 stores.

While trading has been difficult, Clacher emphasises that the company is seeing early signs of improvement - but admits it faces continued challenges in tier three and four cities, which account for around one-third of its doors.

"What I would say is that tier three and tier four cities aren't ready. There isn't enough luxury trade, [but] there are beautiful shopping malls, so the hardware has been built," he adds.

Describing the discrepancy in trade between the two, Clacher says that at the moment it takes five stores in tier four cities to generate the same revenues as a single tier one city store.

"There was a lot of pioneering going on in China, into building infrastructure all over the place, but they were building it with a view to the population exploding much faster than it has done. So I feel that maybe we're a little bit early," he explains.

Despite being ahead of the game, Clacher says it's the "same as online shopping in China; everyone says you're going to lose money, but if you don't do it now you're going to miss it in three to five years, and it's the biggest market in the world."

Yet he still sees potential in tier three and four markets - highlighting that some cities buck the trend. Taiyuan, a tier four coal mining city south of Beijing, is one of the top five Gieves & Hawkes stores in the world.

The company's strategy over the next few years is to go into cities where there are natural mineral resources. "Wherever there is coal, wherever there is gold coming out of the ground, there seems to be a much bigger propensity for wealth per capita, so that's where we will be targeting."

Likewise the company, which currently works on an owner operated model, may look to different distribution models in some parts of China.

"What we are finding more and more is that there is local expertise - great shopping mall owners, great distributors that we need to tap into," Clacher says.