Did Dolce & Gabbana destroyed its own future by 1 video?
Dolce&Gabbana was trying to conquer the Chinese market but made a terrible mistake at the end of 2018. In their market campaign D&G loves China they showed a Chinese model awkwardly attempting to eat Italian food with chopsticks. Many Chinese saw this as a severe insult to their culture. D&G was stereotyping Chinese people and was making fun of their cultural values. Later a screenshot of an Instragram conversation between Stefano Gabbano and a model appeared on social media where the co-owner reacted to the criticism in a very impolite way and called China a country of shit. The screenshots and video below have led to a firestorm in China.
People reacted furious on social media and started to boycott the brand. Fashion influencers started to burn, cut, throwing away their products of the company and big companies such as Alibaba removed D&G from their website. In a reaction of panic the owners of the brand told that the Instagram account of Stefano Gabbana was hacked. Later they made a video to apologize themselves towards the Chinese community that was offended by the campaign that needed to promote their fashion show in Shanghai. Nevertheless many people in China didn’t believe that these apologies were very sincere.
This is not the first time that the marketing department of D&G made a mistake in China. In 2017 D&G launched a campaign in China where the company made pictures of their Chinese models in Beijing together with locals. Many Chinese were questioning why D&G only showed the underdeveloped parts of Beijing in their campaign. Chinese fashion bloggers showed their displeasure on social media platforms such as Weibo. This has caused D&G to delete their pictures on their Chinese social media accounts.
Why this can be a disaster for the company in the future? For this it is necessary to have a closer look to the sector and its forecast.
Nowadays Chinese consumers spend 770 RMB to luxury goods. This is 32% of the total industry. According to a report of McKinsey these numbers will only increase. By 2025, 65% of the growth in this sector is delivered by Chinese consumers. This implicates that Chinese consumers are willing to spend 1,2 trillion RMB to luxury goods such as watches, jewelery, bags and cosmetics. In China young people see luxury goods as social capital. Possessing goods of different designer brands makes it possible to express their unique lifestyle and to become part of an exclusive community.
The graph above proves that there is still a lot of opportunity in the Chinese market. 50% of the post-1990 generation who has bought a luxury product did this for the first time last year. This generation was born in a China with a one-child policy. Chinese parents want the best for their only child and will give him or her a lot of affection but also financial support. This generation grew up in a world surrounded by social media what implicates that they are digital connected. What the community says on social media has a big influence on them. It is a challenge for luxury brands to approach this Chinese generation in the right way. Chinese customers seek for an unique online- and offline experience but to succeed as a luxury brand the brand needs to be present on social media in a positive way. Working together with famous Chinese influencers can become the key to approach this generation in the most effective way.
Dolce & Gabbana needed to cancel its show in Shanghai after all the controversy. Today the company is still feeling the consequences of that video and how Stefano Gabbana dealed with it. A lot of famous names were missing in Dolce & Gabbana’s February fashion show in Milan. Stevie Wonder, Monica Bellucci, Angelica Chueng, many top-models and influencers stayed away from the event. As mentioned in previous paragraph, social media and more concrete the influencer economy is the key to approach customers in this segment. Being seen on social media platforms is very important for luxury brands so every missing influencer during the show implicates less visibility on social media. The number of posts about the D&G show dropped to a tenth of their previous level. Till today D&G is missing on e-commerce platforms such as Alibaba and magazines as Vogue in China.
Written by Arno Lacompte
Sources: Bloomberg + China Luxury Report 2019 McKinsey