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Can unconventional win in China? OTB is betting on it
The fashion conglomerate that owns Maison Margiela, Marni and Jil Sander is betting on large-format stores, collaborations with local creatives and limited distribution. Vogue Business unpacks the playbook.
By Yiling Pan
Courtesy of OTB
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Only The Brave (OTB) Group, the owner of fashion brands Marni and Maison Margiela, is pushing into China fast with its mix of unconventional brands, betting Chinese consumers are ready for alternatives to the big players.
In early 2022, OTB will unveil its first "Brand Hub" in the country, opening four stores in a row for Maison Margiela and sister brands Jil Sander, Marni and Amiri (it owns a minority stake) at a newly renovated high-end commercial complex named JC Plaza in Shanghai, Vogue Business can reveal. It will also be the first Amiri store in the market, and the first Jil Sander store built by OTB since it acquired the brand early this year.
"China is the biggest luxury market in the world, " says Renzo Rosso, founder and chairman of Margiela parent OTB in an interview with Vogue Business to mark the opening of the new stores. Margiela opened its first-ever mainland China flagship store over one year ago, and in the last 15 months has opened nine permanent stores and one pop-up across Shanghai, Chengdu, Beijing and Xiamen. All stores house the full range of Maison Margiela products, from women's and men's ready-to-wear and accessories, to footwear, jewelry and fragrance, with the visual language of creative director John Galliano front and centre.
OTB is opening a "Brand Hub" in Shanghai's trendy luxury complex JC Plaza.
The arrival of sophisticated young Chinese fashion consumers spells a big opportunity for OTB. The rapid expansion of the luxury market in China has pushed affluent consumers to become smarter, more sophisticated and more discerning in recent years. Rosso, who built denim giant Diesel with his creative take on denim and marketing, has built a collection of brands which he describes as "alternative luxury". Avant-garde fashion is gaining a foothold with a growing number of young Chinese consumers, looking for fashion beyond household names such as Louis Vuitton, Hermès and Chanel. OTB is on track to post a good turnaround by the end of 2021, with revenues expecting to reach €1.5 billion.
"Brands such as Maison Margiela, Marni, and even Yohji Yamamoto and Dries Van Noten, which are considered avant-garde and niche, have started to attract more Chinese customers lately," says Chloe Sun, who has been in the professional luxury purchasing business, aka daigou, for the past six years. "And what's interesting is that these Chinese shoppers are not just coming from the first-tier cities where people are considered more sophisticated in fashion taste. There are many young people from second-tier and third-tier cities." Maison Margiela's classic Tabi shoes, 5ac handbags, and fragrance products (licensed to L'Oréal Group) are currently popular items among Chinese shoppers, she says.
Japan is still the biggest Asian market to the group, with 25 per cent of revenues, according to the company, but China is taking an increasingly significant role in OTB's overall development plan, along with the US for the next three years. The company has the plan to go public in 2024 and Rosso does not exclude the possibility of adding new brands to the portfolio, he says.
OTB's Renzo Rosso: 'Fashion is a magic industry'
By Vogue Business Team
First "brand hub" in China
Rosso says the company's next big moment with Chinese luxury shoppers is just around the corner, with the opening of the Brand Hub, although he still cannot go and witness it personally due to travel restrictions.
The prime location of the new Brand Hub is in the former Shanghai JC Mandarin Hotel, which is right across the street from the city's luxury landscape Plaza 66 facing top-tier brands including Louis Vuitton, Bulgari and Hermès, makes it set to become another highly coveted luxury destination on the bustling Nanjing West Road.
"JC Plaza is a very big project for us where we will have stores of Maison Margiela, Jil Sander, Marni and Amiri rolling out together on Nanjing West Road. They will be more than just stores, they will be hubs where people are able to see, experience and explore our brands," Rosso says.
Renzo Rosso, founder and chairman of OTB.
Nimble approach to embrace Chinese creativity
Like many other Western luxury brands in China, OTB brands that are currently active in the market — namely Diesel, Marni, Maison Margiela and Viktor & Rolf — have developed localised business strategies to cater to Chinese consumers.
Maison Margiela opened an e-commerce store on Tmall marketplace back in 2019 and established an official presence on domestic social media platforms Xiaohongshu and Douyin in April this year. Marni and Diesel constantly organise consumer-driven events at their stores to drive engagement and create a sense of belonging with shoppers. Viktor & Rolf signed Chinese celebrity Angelababy as brand ambassador.
What stands out is the unique, nimble approach to Chinese culture and local creativity. Rosso for his part has a great passion and willingness in supporting and collaborating with Chinese talents.
"The direction that I give to every one of our creative directors is to do collaborations with Chinese talents," says Rosso. "I want to create an ongoing relationship between our brands and the local culture."
Chinese independent designers Xander Zhou and Pronounce both worked with Diesel on capsule collections before the pandemic started in 2020. Marni's creative director Francesco Risso, during a dialogue with Chinese ethnic group Miao, was inspired by its centuries-old artisanal traditions of embroidery, lace and silverware, releasing the Marni Miao capsule collection in April this year as a tribute to the community and its unique craft.
OTB Group is also one of the sponsors of the Yu Prize, a fashion-focused annual award founded by Chinese fashion investor and influencer Wendy Yu in 2020 to discover and support emerging local designers. The company provides the winners with a 12-month mentoring programme with a focus on sustainability.
OTB is leaning on localised business strategies to attract Chinese consumers.
Stay true and profitable
Last month, OTB joined the heated metaverse luxury battle through setting up a new business division "Brave Virtual Xperience". The venture aims to "connect younger consumers to fashion and lifestyle brands, and to create projects capable of accelerating the growth of OTB [by] generating new business opportunities in the metaverse".
One of the key challenges that is destined to confront Renzo, as he takes all brands to China to grow them further, is how he plans to balance the pace of growth of these unconventional fashion labels and keep their identities true, while effectively serving the interest of the consumers in China.
"Running Margiela, what was important for me was to keep the house's real attitude, real DNA," recalls Rosso, who kept investing in this loss-making brand for 17 years until it finally turned profitable in 2019. "And to do that we had to maintain the selective distribution, and very limited-edition production," he says.
Home Chou, independent brand consultant and stylist, says that China is ready for OTB: "In first-tier and second-tier cities, consumers are no longer that interested in logo-driven fashion and luxury brands. Instead, unique and niche designer brands… become the first choice for those who want to show personality."
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