M.A.FINAL PROJECT_LUXURY & BRAND MANAGEMENT_YI CHING LAI by irene lai (Yiching)

Utilizing digital technologies to enhance the visual merchandising strategy for CELINE in the Chinese market

Final Project Paper for the degree of Master of Arts in Luxury and Brand Management at Savannah College of Art and Design

Irene Lai Atlanta, GA © May 2022

Dedication

First of all, I would like to devote this final project paper to my parents, James Lai and Vivi Chiu, who have always been supporting my studies at SCAD, and encouraging me throughout the whole project. Moreover, I would like to express my greatest appreciation to Scott Yu, Beryl Jiang, Efsun Yilmaz, Chloe Hu, Andy Xie, Jackie Wu, Liz Jiang, Vanney Heng, and Xiao Tan for their unfailing help on my primary research and sincere suggestions for this final project.

Acknowledgments

I would like to show my greatest appreciation to Professor Kimberly Rabanal for this final project. With her persistent encouragement and instruction, I have been motivated and moving forward to the final stage of the project that help me build a strong professional background for my future careers.

Table of Contents List of Figures

Abstract

I. Introduction

II. Literature Review

Introduction of Literature Review

1. CELINE

1.1 About CELINE

1.2 CELINE History

1.3 Current Status

1.3.1 Financial Mission

1.3.2 Market Size

1.3.3 New Branding Strategy

1.3.3.1 New Brand Recognition

1.3.3.2 New Creative Director: Hedi Slimane

1.3.3.3 Retarget Chinese Luxury Market

1.3.4 New Retail Strategy

1.3.5 CELINE in Chinese Luxury Market

2. Industry Trends and Research

2.1 Definition of Luxury

2.2 Luxury Industry

2.3 Luxury Retail

2.4 Trends in Luxury Retail

2.5 The Luxury Market in China

3. The power of Visual Merchandising

3.1 Definition of Visual Merchandising

3.2 History of Visual Merchandising

3.3 The role of Visual Merchandising in Luxury Retail spaces

3.4 Digital technology and Visual Merchandising

III. Primary Research Methodology

1. Primary Research Objectives

2. Primary Research Goal

3. Primary Research Method 1: Survey

3.1 Target Audience

3.2 Plan for Execution

3.3 Survey Questions and Responses

4. Primary Research Method 2: Interviews 4.1 Interview of industry professionals

43 43

4.1.1 Goal

4.1.2 Interviewee background

4.2 Interview of Target Consumers

4.2.1 Goal

4.2.2 Interviewee Background

5. General Findings of Primary Research

IV. Solutions

1. Introduction

2. Discussion

2.1 Brand Analysis

2.1.1 Brand identity

2.1.2 Brand Mission Statement

2.1.3 Brand Positioning

2.1.4 SWOT Analysis

2.2 Market Analysis

2.2.1 Target consumer and Personas

2.2.2 Competitive Analysis

2.2.2.1 Direct competitors

2.2.2.2 Indirect competitors

2.2.3 Communication Channels

3. Limitations

4. Recommendations for future research

5. Suggestions

5.1 Visual Merchandising Strategy

5.1.1 Location Selection

5.1.2 CELINE’s existed VM guide

5.1.3 Digital Technologies installation prototypes on VM

5.2 Other Digital Application Prototypes on VM

V. Conclusion

VI. Glossary

VII. References

VIII. Appendix

Appendix List of Figures Appendix A. Online Survey Questionnaire: Google Form Appendix B. Online Survey Questionnaire: Tencent survey Appendix C. Interview Transcripts 1 Appendix D. Interview Transcripts 2 Appendix E. Interview Transcripts 3

Appendix F. Interview Transcripts 4 Appendix G. Interview Transcripts 5 Appendix H. Interview Transcripts 6

List of Figures

Figure 1. Year 2021 Revenue of Fashion and Leather goods division of LVMH (LVMH, 2022)

Figure 2. 2021 Revenue by region (LVMH, 2022)

Figure 3. 2021 Revenue by business group (LVMH, 2022)

Figure 4. Acceleration of revenue growth in Q4 (LVMH, 2022)

Figure 5. Brand Value Change 2020-2021 (%) (Brand Finance, 2021)

Figure 6. Slimane’s slender masculinity drawn by Jay McCauley Bowstead in 2005. (Bowstead, 2015)

Figure 7. Celine’s Madison Avenue boutique (Jose Dávila’s Aporía IV, 2017) 21 Figure 8. Celine’s SoHo flagship (Charles Harlan’s Tree, 2018; Virginia Overton’s Untitled, 2018) Figure 9. Celine’s Madison Avenue flagship store in NYC (c) Celine

21 22

Figure 10. alue of various global luxury markets in 2021, by market type (in billion euros) (Sabanoglu, 2022)

Figure 11. Market size of luxury goods (in USD million) by 2021 (Euromonitor International, 2022)

Figure 12. Market size of personal luxury (in USD million) by 2021 (Euromonitor International, 2022)

Figure 13. DIOR’s web AR experience in DIOR HOMME pre-fall 2019 (Windowswear, 2019)

Figure 14. H&M voice interactive mirror in Manhattan Flagship store in New York (Windowswear, 2018)

Figure 15. China’s share in the global personal luxury market in 2012 and 2018 with a forecast until 2025 (Statista, 2021)

Figure 16. Value of the leading personal luxury goods markets worldwide in 2020, by country (Statista, 2021)

Figure 17. Distribution of luxury consumers in China as of June 2021, by age group (Statista, 2021)

Figure 18. Google Forms

Figure 19. Tencent survey

Figure 20. The shared link of Google Form (Google Form, 2022)

Figure 21. The shared link and QR code of Tencent survey (Tencent Survey, 2022)

Figure 22. Kapferer’s prism for CELINE (Kapferer, 2012)

Figure 23. Equal distance between items on the rail. (Windowswear, 2022)

Figure 24. Focal point is always placed star products (Windowswear, 2022) 67 Figure 25. Spacial in-store spaces with rest areas (Windowswear, 2022)

Figure 26. CELINE Shanghai in-store merchandising (CELINE, n.d.)

Abstract The objective of this final project is to enhance the customer retail experience by incorporating digital technologies on visual merchandising (VM) in new CELINE’s physical stores in mainland China, to help achieve the goal of market share consolidation, increase the sales volume and brand awareness in the Chinese luxury market. By examining the ongoing and emerging trends in luxury retail spaces, analyzing the CELINE’s current status in China, and the relationship between digital technologies on VM, readers will identify the power of digital technologies such as Augmented Reality (AR) on VM in CELINE’s new retail spaces in mainland China, and immerse in the “Phygital” world in this Parisian luxury house curated by the artistic, image and creative director Hedi Slimane. After reading this final paper, readers will recall the brand heritage, the fusion of Slimane’s aesthetics in new CELINE era, and have more insights into the expectations of Chinese younger consumers, Millennials and generation Z, toward the VM future development in new CELINE’s physical places. Key words: Customer Retail Experience, Digital Technologies, Visual Merchandising, new CELINE, Chinese Luxury Market, Luxury Retail, Augmented Reality, Phygital, Hedi Slimane, Millennials, Generation Z

Introduction

Luxury brands are drawn to the Chinese market given that in 2021 the Chinese luxury market, mostly in the mainland, continued the double-digit growth over 2020, and is expected to be the world’s largest luxury market by 2025 (Bain&Company, 2022). The luxury conglomerate LVMH’s fashion and leather goods sector has reported 24% growth in total due to the performance of its luxury houses including CELINE in the Chinese market (Guilbault, 2021). CELINE has been rated the top luxury label in sales growth of 118% from 2020 to 2021, thanks to its huge market share and increasing brand awareness among future consumers in China (Brand Finance, 2021). Since fashion designer and photographer Hedi Slimane has been assigned as the new creative, artistic, and image director at CELINE in 2018, the expectation from LVMH’s CEO is to double or triple Celine’s current $1 Billion euros sales within 5 years by retargeting the Chinese market and utilizing a new branding strategy (JING DAILY, 2021). The rebranded CELINE has changed the logo without the accent on the “e” in the typeface which is more balanced and concise (Tencent Fashion, 2018). CELINE’s retail stores are redesigned and renovated to accommodate more products due to newly added in collections of menswear and perfume (Sherman, 2018). Thus, CELINE’s rebranding strategy under Hedi Slimane’s leadership is called the new

CELINE, which is totally different from the style of previous creative director Phoebe Philo which was recognized as the old CELINE. Last but not least, the celebrity endorsement of the K-POP star LISA has contributed a lot to the financial performance in Slimane’s era, hitting a huge success in both the Chinese luxury market and in the LVMH group. The new retail strategy of CELINE provides opportunities for marketing in the physical retail stores by larger interior spaces and art installations curated by the CELINE Art Project. The store design, displays and in-store visual merchandising have been curated by the creative director Hedi Slimane (Wrigley, n.d.). Visual merchandising (VM) is a part of marketing, using visual presentation and narratives to engage customers in the physical retail spaces (tokinomo, 2022). VM is more than selling products because it utilizes the art of visual displays to entice the customers’ eye, engaging them through visual impact while predicting and capturing customers’ purchase behavior to drive the sales (Singh, 2020). Especially in the luxury and fashion sphere, brands highly rely on the product presentation and upholding exclusivity for customers to touch and feel physically (Chen et al., 2021). VM is the direct way to interpret brand's DNA, codes, personality, and culture, also the tool for brands to attract shoppers and manage to keep customers in-store. Above all, creating unique shopping experiences for the customers is a critical job of VM for luxury

brands (Singh, 2020). This final project offers a new Visual Merchandising strategy for the luxury house CELINE into the Chinese market, specifically in the mainland, by incorporating digital technologies onto displays and store design to earn the attention and engagement of more consumers at the physical retail, and help increase the sales volume on top of their successful marketing strategy. The final project paper will focus on three components, which are CELINE’s brand analysis, market analysis, and Visual merchandising plan. This research will provide the industry analysis, consumer research, new branding and retail strategy to support the new Visual merchandising strategy for CELINE in the mainland China. II. Literature Review Introduction of Literature Review After a long lockdown under the pandemic, physical retail ceased for quite a while but ultimately, the traditional retail could not be replaced (Nikhil & Smith, 2021). Digitalization and technology prompted the growth of E-commerce and online experience, but they are just kinds of tactics for selling and shopping, and people still desire the real touch and feel, human interaction, and the real connection in the real world, especially for luxury goods and apparel that uphold exclusivity (Chen et al., 2021). Based on this fact, VM plays a significant role in the customer purchase

journey not only by means of the visual presentation, but also conveying the moods to create unique shopping experiences (Chen et al., 2021). Based on these facts, in this project paper, I aim to propose a Visual Merchandising strategy for incorporating digital technologies for the luxury Maison CELINE in the Chinese market. The literature review aims to give a background of the industry, trends and the brand’s status, as well as the justification of the topic. 1. CELINE 1.1 ABOUT CELINE Founded in 1945, CELINE is a luxury French fashion house by Céline Vipiana. The CEO is Séverine Merle and the current creative director is Hedi Slimane (LVMH, 2022). Currently, CELINE has its global presence of 178 stores with 2500 employees worldwide. The headquarters is in Paris, France, providing a ready-to-wear line, haute couture and leather goods with 4 collections per year (LVMH, 2022). CELINE was sold in July 1988 for around $540 million USD, and has been owned completely by multinational luxury conglomerate LVMH since 1996 (THE MONEY EDITOR, 2022), becoming one of the subsidiaries in the fashion and leather goods sector under LVMH group (LVMH, 2022). The brand heritage has accumulated through different periods under each creative designers’ style from the very beginning - the icon of the Blazon Chaine

featuring intertwining Cs in the era of Céline Vipiana, through Kors’s sportwear aesthetics for more accessibility, Phoebe Philo’s contemporary, feminine, Parisian minimalism to Hedi Slimane’s skinny edgy styles mixed with the brand’s bourgeois aesthetic of the 1970s until now (HAUTE HISTORY, 2020). 1.2 CELINE’s History CELINE was founded by Céline Vipiana and her husband Richard Vipiana as a made-to-measure children's shoe boutique in Paris in 1945. The brand’s first logo was a red elephant designed by cartoonist Raymond Peynet (HAUTE HISTORY, 2020). After 1960, the brand had gradually expanded its portfolio by adding womenswear using a sportswear approach to strengthen both style and functionality (HAUTE HISTORY, 2020). In 1966, the brand had expanded its product range to include accessories, footwear, and leather goods and used “made in Florence” to demonstrate the high quality (HAUTE HISTORY, 2020). In 1973, the logo was changed from the red elephant to a new one, the Blazon Chaine featuring intertwining Cs inspired by the famous landmark in Paris, Arc de Triomphe (HAUTE HISTORY, 2020). One day in 1972, when Céline Vipiana was stuck in front of Arc de Triomphe, she noticed the intricate motif on the iron chain surrounding the Arc de Triomphe and was inspired by two Cs facing in opposite directions (Tencent Fashion, 2018). The intertwining Cs on Blazon Chaine thus had

become CELINE’s signature (Tencent Fashion, 2018). From 1987, the brand had gradually been purchased by Bernard Arnault, the owner of the luxury conglomerate Moët Hennessy Louis Vuitton (LVMH). In 1996, the brand was acquired completely by LVMH, becoming one of the Maisons under the sector of fashion and leather goods (HAUTE HISTORY, 2020). After incorporating CELINE, LVMH revived the business (Dudbridge, n.d.). Though being a part of LVMH, CELINE was still under the leadership of Céline Vipiana until her death in 1997 (HAUTE HISTORY, 2020). The succeeder Michael Kors, who was regarded as the first ever creative director in CELINE, turned the brand into a success with his extraordinary ready-to-wear lines and accessories collections (Dudbridge, n.d.), and leveled up the brand to compete with other meta luxury brands, Louis Vuitton and Loewe, who both had hired American creative directors at the same time (HAUTE HISTORY, 2020). Michael Kors’s sportswear aesthetics injected a fresh spirit into the brand by the jet set collections, including skimming dresses, cashmere sets, swimwear and colorful tailoring (HAUTE HISTORY, 2020). After Kors’s departure, CELINE went through the leadership of several creative directors, Roberto Menichetti and Ivana Omazic, with disappointing financial performance (HAUTE HISTORY, 2020). In 2008, Phoebe Philo was appointed as the creative director, starting her debut during S/S

2010 Paris Fashion Week (Dudbridge, n.d.). Under Philo’s era, the brand’s fortune started to bounce back (HAUTE HISTORY, 2020). Philo’s elegance, minimalism, and a little hint of androgyny embedded with Vipiana’s aesthetics spoke to the contemporary consumers, and especially succeeded among the women’s market (Dudbridge, n.d.). Phoebe Philo made CELINE as one of the star brands in luxury fashion, and Philo’s minimalism has been recognized by critics as aligning with prevailing values of the industry (VOGUE RUNWAY, n.d.). Philo said, “I just thought I’d clean it up. Make it strong and powerful – a contemporary minimalism,” stating that CELINE had moved into a whole new stage (VOGUE RUNWAY, n.d.). After a successful decade at CELINE, Philo stepped down and was succeeded by Hedi Slimane, who was named as the new artistic, creative and image director of CELINE in 2018 (LVMH, 2018). Before taking the leadership of CELINE, Slimane had a controversial rebranding of SAINT LAURENT (HAUTE HISTORY, 2020). It was not surprising that he inserted his signature of super skinny edgy styles to CELINE which was not widely accepted by Philophiles, the supporters of Philo’s old CELINE style (HAUTE HISTORY, 2020). Hedi Slimane’s CELINE, is clearly defined as “new CELINE”, breaking from the old (VOGUE RUNWAY, n.d.). Under the helm of Slimane until now, he expanded the men’s market share with

his expertise and background in menswear (HAUTE HISTORY, 2020). CELINE also launched its high-end perfumery collection during Slimane’s era in 2019 (LVMH, 2019). Slimane’s design style of CELINE’s “luxe sportswear” and his transmission of the brand’s bourgeois aesthetic of the 1970s have lured the heart of the young generation – Generation Z (VOGUE RUNWAY, n.d.). 1.3 Current status CELINE is one of the fashion and leather goods Maisons under LVMH, the largest luxury conglomerate in the world (LVMH, n.d.). Thanks to the powerhouses Dior, Louis Vuitton, Fendi, CELINE, Loewe and Marc Jacobs, the conglomerate’s fashion and leather goods division had sales growth of 24% over the third quarter in 2021, was surpassing the estimated goal of 21% analysts set (Guilbault, 2021). The year 2021 is also a key year for CELINE thanks to the success of its readyto-wear line designed by Hedi Slimane, and the digital fashion shows directed and filmed by Slimane in person (LVMH, 2022). Besides, the sales of CELINE’s leather goods of Triomphe and 16 lines has soaring globally (LVMH, 2022). While entering 2022, the sector of the fashion and leather goods is confident to face new challenges with key strengths of exceptional expertise and excellent customer experience (LVMH, 2022). CELINE’s growth is expected to be stimulated by the expansion of store distribution as well as the development of its omnichannel

strategy to continuously offer better customer service (LVMH, 2022). LVMH management stated (as cited in TFL, 2022), “Celine has one of the fastest growth rates in the industry under the watch of creative director Hedi Slimane and CEO Séverine Merle.” 1.3.1 Financial mission CELINE’s mother company LVMH has set the clear financial mission for the brand to double or triple 2018’s 1 billion Euros in sales within five years after the appointment of the new creative director, Hedi Slimane (Williams, 2021). Though LVMH doesn’t publish the financial reports of each Maison respectively, the analysts are predicting that CELINE is progressing fast toward the goal of 2 billion euros in annual sales by 2021 (Williams, 2021; sohu, 2022). 1.3.2 Market size According to LVMH’s 2021 report, the revenue of the conglomerate was 64.2 billion euros which shows 14% growth compared to 2019, and it had a 36% increase in revenue compared to 2020 (Fig.1, LVMH, 2022). In terms of region, the revenue of Asia accounted for the largest share of 35%, excluding Japan, followed by the United States with 26% (Fig.2, LVMH, 2022). Among all divisions, Fashion and Leather goods had the largest share of 48% in 2021 (Fig.3, LVMH, 2022).

Figure 1. Year 2021 Revenue of Fashion and Leather goods division of LVMH (LVMH, 2022)

Figure 2. 2021 Revenue by region (LVMH, 2022)

Figure 3. 2021 Revenue by business group (LVMH, 2022) Thus, 2021 was a key year for the division of Fashion & Leather goods (LVMH, 2022). Revenue in Fashion and leather goods division had a growth of 42% compared

to 2019 (Fig. 4, LVMH, 2022).

Figure 4. Acceleration of revenue growth in Q4 (LVMH, 2022)

According to Brand Finance, CELINE was ranked as the fastest growing luxury brand in 2021 with positive growth of 118% in brand value, and had reached around 1.5 billion USD under the leadership of Heidi Slimane (Fig.5 , Brand Finance, 2021).

Figure 5. Brand Value Change 2020-2021 (%) (Brand Finance, 2021)

1.3.3 New Branding Strategy With the brilliant records of commercial results in Dior Homme and Yves Saint Laurent, Hedi Slimane was assigned to be the artistic, image and creative director at CELINE (Sherman, 2018). This appointment was clear, to double or triple of $1 billion euros sales of 2018 within five years (Williams, 2021), alongside the launch of new menswear, couture and fragrance with strong digital strategy as well as new store expansion, to help drive sales (Sherman, 2018). 1.3.3.1 New brand recognition Under the helm of Phoebe Philo’s CELINE during a decade, the brand had been recognized as a wardrobe exclusive to modern women, and had avoided social media until the late 2017 (Sherman, 2018). However, after Hedi Slimane took over CELINE in 2018, he removed all the posts on Instagram and the accent of the first E of CELINE and made it all caps. The reactions were a mixture of disgust and celebration, especially on Weibo, a popular Chinese social media platform, the hashtags #Celine designer ['s design] is stifling (JING DAILY, 2021 as cited in Sherman, 2018) had over three million views and over 1000 comments (Sherman, 2018). The obvious differences between Philo’s old CELINE and Slimane’s new CELINE are the design styles (Tencent Fashion, 2018). Philo inserted her personal style, Parisian feminine, effortless chic embodied by contemporary minimalism, into

the brand, transferring it as a part of the brand’s DNA; Slimane’s new CELINE instead blends his rebelliousness, dark and rock street style with the brand’s existing DNA, and this kind of fusion is popular with young customers (Tencent Fashion, 2018). Moreover, Slimane created the new collection – menswear for CELINE – increasing the brand’s identity with masculinity, which means CELINE is no longer exclusive to the female market (Tencent Fashion, 2018). Hedi Slimane’s new CELINE is a signal that the brand is becoming younger, more energetic, and in the spirit of adventurousness (Tencent Fashion, 2018). 1.3.3.2 New creative director: Hedi Slimane Hedi Slimane, both a designer and photographer, had his tenure in Yves Saint Laurent to Dior from 1997 to 2007, and was the director to launch new menswear in Dior, Dior Homme in 2000 (Rees-Roberts, 2013). Slimane is a symbolic figure in men’s fashion of the rise of “creative director” taking charge of various collections, brand identity as well as store design, for instance, the architecture of Dior Homme boutiques (Rees-Roberts, 2013). Slimane’s iconic style of skinny silhouettes, teen-boy spirit, darkness and rock’n’roll has been witnessed in the luxury and fashion industries since the debut of Dior Homme against the typical imagery of Christian Dior’s DNA (Rees-Roberts, 2013).

According to Rees-Roberts (2013), Slimane is truly a “creative director,” who not only mastersi various collections, but also expresses his expertise in brand’s visual identity through store design, architecture photography and music scene (ReesRoberts, 2013). Slimane’s rock-and-roll street style was deeply influenced by the pop culture in America, and English pop music led by David Bowie in the mid to late 1970s. Besides, his own monochromatic style was transmitted from the tone of French band Phoenix (Rees-Roberts, 2013). The combination of pop elements shaped Slimane’s unique aesthetics in street fashion (Rees-Roberts, 2013). Bowstead states that Hedi Slimane’s slim silhouette caused a sensation in the 1990s by introducing his masculine concept to the male consumers, impressing them with a new imagery of masculinity (Fig.6 , Bowstead, 2015).

Figure 6. Slimane’s slender masculinity drawn by Jay McCauley Bowstead in 2005. (Bowstead, 2015)

Hedi Slimane’s iconic signature totally reversed Philophilies’ perfect imagination for CELINE in that the new style is not easily associated with modern women’s aesthetics (Sherman, 2018). Though Slimane’s new style was controversial in the beginning, his adventurous spirit has gradually been embraced by the younger customers, writing a new chapter for the brand (Tencent Fashion, 2018). 1.3.3.3 Retarget Chinese luxury market With the financial mission LVMH has set, Hedi Slimane has insisted his rock’n’roll aesthetics along with the launch of menswear, which were not widely accepted by the followers of Philo in the beginning, however, the halo effect of the brand ambassador Lisa, a member in the K-POP group BLACKPINK, led the popularity of the leather goods with CELINE’s Triumphed Cs and monogramed handbags among generation Z in China (JING DAILY, 2021). Generation Z, growing up in the digital world has been recognized as the dominant purchasing power in the future (Chillman, 2019). In 2017, CELINE started its first E-Commerce website, Celine.com, in France, and opened its online website in Europe and the US as well as Asia in the following years, stating the brand was officially joining omnichannel line (Little Red Book, 2021). This marketing strategy is especially effective in Asia, including China, offering more seamless shopping experience for luxury buyers and is an obvious sign

that CELINE is going younger and aims at the Chinese younger consumers through digital marketing strategies (Little Red Book, 2021).

1.3.4 New Retail Strategy Along with the new branding strategy, the new physical retail strategy is driven by housing more collections in store due to the increase of menswear and perfume lines (Merle, as cited in Wrigley, n.d.). As CELINE’s CEO Séverine Merle said, “Celine has a great distribution network and high-quality visibility but no large stores. We need to open flagships in major cities, larger stores that can accommodate menswear and newly expanded women’s collections” (Merle, as cited in Wrigley, n.d.). Apart from the new store’s expansion around the globe, the new store’s interior design is also a part of the new retail strategy (Wrigley, n.d.). The artistic, image, and creative director Hedi Slimane has his new vision for the store design through the Celine Art Project (Larigakis, 2020). Hedi Slimane renovates the retail spaces by collaborating with 28 artists to decorate the interiors with art pieces and his own unique aesthetics of art (Larigakis, 2020). Slimane said that there is a shared language between the installed works and retail spaces (Larigakis, 2020). The new design concept for the retail spaces fully embodies Slimane’s aesthetics, using the architectural elements of natural stone, black marble, steel mirrors, wood and concrete

(Wrigley, n.d.). The color scheme is in black and white, featuring contemporary minimalism, the tradition of CELINE (Fig. 7 and Fig. 8, Dijokas, 2019; Larigakis, 2020).

Figure 7. Celine’s Madison Avenue boutique (Jose Dávila’s Aporía IV, 2017)

Figure 8. Celine’s SoHo flagship (Charles Harlan’s Tree, 2018; Virginia Overton’s Untitled, 2018)

The new store expansion started from the flagships store with 5,000 square feet on Madison Avenue in New York, and has gradually spread to dominant cities around the globe like Paris, Tokyo, Los Angeles, London, Milan, Shanghai and Beijing (Fig.9, Wrigley, n.d.).

Figure 9. Celine’s Madison Avenue flagship store in NYC (c) Celine 1.3.5 CELINE in the Chinese Luxury Market According to Williams (2021), Hedi Slimane’s new vision is moving toward youth fashion, from baby rockers to neo-bourgeois, which has a huge possibility to capture the young generation’s eyes and heart. Under the expectation of LVMH, Slimane is dragging CELINE to the key luxury market – the Chinese market – and finding his own way to gain more market share to compete with the main competitors GUCCI and BALENCIAGA in China (Williams, 2021). Though there was some backlash during Hedi Slimane’s debut in 2018, his punk rock and cool philosophy is well blended with CELINE’s DNA and getting acceptance of Chinese Millennials and generation z (MillZ) customers (JING DAILY, 2021). Moreover, Slimane utilized the Key Opinion Leader (KOL) effect by inviting Lisa from the K-pop group Blackpink, who is the popular icon embraced by the younger communities, to be the first global brand ambassador, in order to create the buzz across media platforms in East Asia (JING DAILY, 2021). A huge number of

customers are shifting to CELINE’s products simply because of the halo effect of Lisa (JING DAILY, 2021). More than that, Hedi Slimane launches the menswear line for CELINE that attracts new target market in China, the male customers (JING DAILY, 2021). New CELINE is focused on the star products carried by the brand ambassador Lisa, and this promotional strategy is not only winning Chinese consumers’ awareness of CELINE, but increasing the sales (JING DAILY, 2021). The fact shows that gen Zers in China have gradually accepted Slimane’s aesthetics of dark, rock’n’roll intertwining sporty elements over past three years (JING DAILY, 2021). After CELINE opened its E-Commerce and online sites in 2019 in China, social media has become the most important communication channel to engage Chinese customers (Little Red Book, 2021). Apart from content engagements on social media platforms, CELINE also launches grand pre-sale campaigns and pop-up stores to create social media moments for influencers to promote brand awareness (Little Red Book, 2022). Aiming to expand its market share and stores throughout China, CELINE has started reaching out to KOLs on Tik Tok (Dou Yin) for collaboration, for instance, CELINE has invited Noen Eubanks for the new campaign shooting to embrace a larger consumer-based scale (SA 123, 2022). Since CELINE’s new boutique concept rolled out in 2019, CELINE has kept

expanding the redesigned flagship stores globally (Luxury Retail, 2019). CELINE has opened its first renovated store in pop-up form in Shanghai in 2019, combining the key elements of gold, black, grey and white to create an upscale ambience for the space (Luxury Retail, 2019). 2. Industry Trends and Research 2.1 Definition of Luxury The definition of luxury evolves from time to time (Chevalier & Gutsatz, 2020). People in the Middle Ages did not perceive it as necessary objects or usage, but in the nineteenth century, luxury items became the symbol of noble, only exclusive to upper class people, remaining a distance from the ordinary (Chevalier & Gutsatz, 2020). Nowadays, the connotation of luxury is positive that luxury has been associated with branding and embodied by the quality of products (Chevalier & Gutsatz, 2020). Batat (2019) stated that “luxury is in each of us and is produced by and for the individuals who practice it” (p. 7-8). According to Batat, luxury can be defined through 7 angles: the institutional, organizational, academic, media, craftmanship, consumer, historical and cultural perspectives (Batat, 2019). 2.2 Luxury industry Luxury industry is a broad arena involving the luxury market, consumers, macro and microenvironment, luxury products, luxury brands and so on (Chevalier &

Gutsatz, 2020). The global luxury market consists of 9 segments encompassing luxury cars, personal luxury goods, luxury hospitality, fine wines & spirits, gourmet foods & fine dining, high-end furniture & housewares, fine art, private jet & yachts, and luxury cruises (Fig.10, Sabanoglu, 2022). The market value of global luxury goods is the second largest group with around 283 billion euros by 2021 (Fig.10, Sabanoglu, 2022).

Figure 10. alue of various global luxury markets in 2021, by market type (in billion euros) (Sabanoglu, 2022)

According to Euromonitor, Luxury industry can be categorized by three sectors, apparel and footwear, luxury goods, and personal accessories (Euromonitor, 2022). Among these three categories, luxury goods is the second largest in global market with 1,125,085.0 million USD and the market size of China is 403487.7 million USD by 2021 (Fig.11, Euromonitor, 2022). Under this sector, personal luxury accounts for

349559.9 million USD in global market size, and 58082.3 million USD in China (Fig.12, Euromonitor, 2022).

Figure 11. Market size of luxury goods (in USD million) by 2021 (Euromonitor International, 2022)

Figure 12. Market size of personal luxury (in USD million) by 2021 (Euromonitor International, 2022) 2.3 Luxury Retail Luxury Retail is a category in the holistic retail scope, selling luxury products with high quality, premium price and the value of exclusivity according to Mahmoud (Mahmoud, n.d.). Being different from other retail business, luxury retail carries both exclusivity

and scarcity from store design, in-store atmosphere, displays and visual merchandising to customer experience (Mahmoud, n.d.). Luxury retail is on behave of a luxury business, showcasing one’s identity to clients (Mahmoud, n.d.). At the physical luxury retail, staff and store represent the brand image, and usually are not stressing on selling products, but instead, creating luxurious shopping experiences for customers (Mahmoud, n.d.). Based on these characteristics, the products and displays in luxury retail avoid being dense and crowded (Mahmoud, n.d.). From a historical perspective, the physical retail channel is regarded as the most traditional profession in the world; in luxury retail, the system includes Directly Operated stores and partner stores apart from wholesale and retail (Chevalier & Gutsatz, 2020). Until today, there are two main types of sales outlets, whole sales and retail sales to showcase and introduce products to the consumers. Besides, in the retail sector, there are not only the brick-and-mortar but also online platforms for shopping. (Chevalier & Gutsatz, 2020). 2.4 Trends in luxury retail According to Chevalier & Gutsatz, customers are the core of any retail business including the luxury industry, which is centered and will be centered around luxury customers within 5 years, namely, luxury business systems will face challenges in this

revolution due to the altering in consuming behavior, expectation for brands and products, and needs (Chevalier & Gutsatz, 2020). In the post-pandemic period in 2021, luxury physical retail sales have gradually recovered by the re-opening of brick-and-mortar, said Mallevays (Mallevays, 2021). At the same time, in the luxury retail scope, E-Commerce growth is increasing in both channels and sales volume, so the challenge for the physical retail is to reconnect with customers (Mallevays, 2021). Luxury consumers have new perspectives while interacting with brands, they become more well-educated when learning about the brand, and expect the brand to insert more story assets in product presentation (Chevalier & Gutsatz, 2020). Mallevays stated that channels are inevitably evolving into a new form - the combination of both online and offline (Mallevays, 2021). In China, the pandemic is the catalyst for the digitalization from marketing practice to customer engagement (Bain & Company, 2022). During the pandemic, physical stores were still an important bridge between brands and customers (Bain & Company, 2022). In the post pandemic period, luxury online sales had reached about 26% of total sales (Bain & Company, 2022). Although digitalization is in trend in luxury retail, the future consumers are still willing to go back to the physical retail spaces because they are expected to have conversations, engaging with luxury brands in the real world and technologies are the

tactics used in the physical spaces, shaping the forms of Phygital (Stephens, 2022). Therefore, providing a unique experience at physical stores that cannot be fulfilled online is paramount (Mallevays, 2021). Flagship stores, the most important channel for luxury brands through years, offer the best venue for customers to have phygital experiences in store (Mallevays, 2021). Batat (2019) said “The new term ‘phygital’ refers to the transformation of physical stores within digital era” (p. 221). The concept of phygital is to offer customer experience using digital technologies to support the sales in the physical retail space (Batat, 2019). The examples of phygital experience are the application of Augmented Reality, Virtual Reality and 3D printings (Batat, 2019). Batat also suggested that if luxury brands integrate technologies to offer the phygital experiences, they have to identify the effective and valuable elements for customer engagement, for instance, the immersion and functionality for customers to have virtual experience in both real and digital world (Batat, 2019). In the Chinese market, generation Z has become the dominant purchasers for luxury goods and they are expecting a more interactive shopping experience in the physical stores as well as having connections with human beings and the real touch on goods (Chen et al., 2021). The main trends in luxury retail are not only the application of digital technologies but also the coexistence of online and offline, the so-called omnichannel in the marketplaces, and the post-pandemic is a great time to rebuild the

mutual relationship in brick-and-mortar, said Chen et al. (2021). Some luxury and fashion companies have constructed phygital practices such as DIOR’s web AR experience (Fig.13, Windowswear, 2019) and H&M’s interactive mirror (Fig.14,Windowswear, 2018). DIOR’s web AR experience was built in DIOR retail spaces during DIOR HOMME’s pre-fall 2019 season. When customers walked into the space, they did not need to download the application, just simply through the browser link to wear an AR robot mask and took pictures to post on social media. After taking photos, players could fill in their information to get the photos (Windowswear, 2019). H&M installed an interactive mirror using the Artificial Intelligence technologies in the Manhattan Flagship store in New York. The mirror is controlled by people’s voice, to enjoy the functions of fashion inspirations from collections, and make the purchase directly via the built-in E-Commerce system. Besides, customers can take selfies using the built-in AR filter of a magazine cover and upload the photo to social media via a QR code, and at the same time, customers are invited to join H&M’s promotional events (Windowswear, 2019).

Figure 13. DIOR’s web AR experience in DIOR HOMME pre-fall 2019

(Windowswear, 2019)

Figure 14. H&M voice interactive mirror in Manhattan Flagship store in New York (Windowswear, 2018)

2.5 The luxury market in China In 2021, Chinese luxury market remained its advantage of double-digit growth in luxury sales and is predicted to become the leader in luxury consumption in the global luxury market by 2025 by Bain & Company (Bain & Company, 2022). Statista also indicates that in 2020, the Chinese luxury buyers accounted for one third of global buyers and is projected to reach nearly half of global luxury goods purchases by 2025, becoming the dominant group of the future customers in the global luxury market (Fig.15, Statista, 2021).

Figure 15. China’s share in the global personal luxury market in 2012 and 2018

with a forecast until 2025 (Statista, 2021) Besides, in terms of the value of the leading personal luxury goods markets, mainland China is at the second place of leading personal luxury goods markets of 44 billion euros, just falls a little bit behind the United States, showing the huge potential for the consuming power (Fig.16, Statista, 2021).

Figure 16. Value of the leading personal luxury goods markets worldwide in 2020, by country (Statista, 2021)

According to the chart below, the largest share of luxury consumers in China is in the age group of 31 to 41 years, accounting for 43%, referring to the late Millennials who were born between 1981 to 1995. The second and third largest shares are in the age between 21 to 31, referring to generation Z who were born between 1995 to 2010 (Fig.17, Statista, 2021). Data revealed that China has a huge clientelebased market for luxury marketplaces, and the sales growth of future consumers in the luxury market are accelerated by Chinese customers (Statista, 2021).

Figure 17. Distribution of luxury consumers in China as of June 2021, by age group (Statista, 2021)

With a keen eye of the market, Bernard Arnault had already aimed to the Chinese luxury group to drive two-digit sales growth for the new CELINE (Sohu, 2021). 3. The power of Visual Merchandising 3.1 Definition of Visual Merchandising Visual Merchandising, abbreviated as VM, is a marketing practice to lure consumers step into a store, and drive sales by the art form of visual displays and presentation (Morgan, 2016). Visual Merchandising is a broad area and can be divided into four general sectors: store design, window displays, in-store visual merchandising and mannequins (Morgan, 2016). The common elements for the four sectors are, theme and scheme, color, props, lightings, signage and graphics, fixtures and fittings, ambience, music, scent, technology (Morgan, 2016). The concept of VM started from window displays

(Morgan, 2016). Apart from merchandise presentation, window displays are usually taking the forms of stories incorporating other elements like props (Morgan, 2016, p. 54). The pioneer of window displays is the department store, the physical retail space usually with the vast number of products to showcase (Morgan, 2016, p. 12). Common windows for product presentation are closed windows, open-back windows, no window, angle windows, corner windows, arcade windows, and showcase windows. (Morgan, 2016, p. 52). In-store displays continue the drama inside the shop from window displays (Morgan, 2016, p. 162). In-store VM includes product adjacencies, fixture and fitting such as gondola, mid-floor fixtures, tables, furniture, hanging rails, wall fixtures, fixed shelves, floor layout including the details of focal point, footfall, walkways, sight lines, product positioning, and overall style of the floor layout, ambience, music, and lighting. Technologies are innovative elements nowadays in store, too (Morgan, 2016, p. 162). Mannequins are the tools to present the latest fashion trends and inspire consumers by the desirable look (Morgan, 2016, p. 200). Mannequin is also a signature of window displays especially (Morgan, 2016, p. 200). Usually, people are getting inspiration from mannequins because it is the direct way to make them feel the clothes are on their figures (Morgan, 2016, p. 200). 3.2 History of Visual Merchandising The origin of VM can date back to the late 19th century that Bon Marche

department store in Paris was the first one offering an impressive shopping experience for its consumers through the grand opening of its architecture (Morgan, 2016). In 1849, Harrods opened in London, starting from a small grocery store also utilized products in artistic presentation and gradually evolved into higher level (Morgan, 2016). In the 1920s, an explosion of creativity in the arts and fashion, which spilled over into window displays in Paris, led the way for the arcades to explore art decoration in store as well as on runways shows (Morgan, 2016). In 1950s, dressers are drawn into department stores in New York and the new style of window dressing was born (Morgan, 2016). Until the 1990s, the advent of technology innovation, the window displays grew to be the propaganda machines to drive sales with massive marketing budget behind them. Not only department stores were going for the trends but also luxury brands were following (Morgan, 2016). Until now, the challenges in VM are the launch of internet. People can shop at home without visiting a store in person, so a good VM is more than important to help a brick-and-mortar to attract consumers by creating special in-store experience (Morgan, 2016). 3.3 The role of Visual Merchandising in Luxury Retail spaces VM serves as a silent salesman yet significant role in the retail spaces (Morgan, 2016). It is the direct way to interpret brand's DNA, codes, personality, and culture,

also the tool for brands to interact with shoppers and manage to keep customers instore (Morgan, 2016). To attract customers’ attention, a visual merchandiser should take charge of windows, in-store displays and layout, to inspire them stay in store and create positive sales for the retailers depending on overall retail standards (Morgan, 2016). 3.4 Digital technologies and Visual Merchandising Phygital in-store has been popular in retail world, referring to the combination of physical and digital (Nicoleta, 2021). Thus, it needs to be considered on building visual merchandising strategy because customers are more attracted to the digital applications in brick-and-mortar and are more appealed to the immersive experience (Nicoleta, 2022). Technology incorporation for displays and in-store merchandising has been important in terms of creating special customer experience at store and is a tool to express the brand identity via innovative tactics (Morgan, 2016). As new technologies have been invented, retail stores are not limited to use digital ways for transaction, but have more opportunities for creativity, such as creating interactive moments through digital elements, enhancing the brand recognition through digital devices in-store, and so on (Morgan, 2016). The digital devices like cell phones and tablets are common tools today for luxury retailers to engage customers, reaching out to online platforms

for e-transaction and virtual engagement, and even support the marketing campaigns across online and offline (Morgan, 2016). Customer behavior keeps evolving with the rise of innovative technologies that retailers are motivated to shift rapidly to offer a more seamless experience in omnichannel era (Morgan, 2016). Visual merchandising can utilize digital board, screen, or lighting strategically to create more interactive shopping environments to navigate shoppers, guiding them around store by digital gadgets or a sales assistant (Morgan, 2016). Technology becomes the primary methods for luxury retailing, visual merchandising and brand building, and has definitely influenced the increase in sales volume, however, the risks of overused or misused technologies might lead to customer dissatisfaction and the blurring brand identity (Morgan, 2016). After all, digital technologies are tools for product presentation to promote the brand (Morgan, 2016). III. Primary Research Methodology 1. Primary research objectives Primary research aims to collect the first-hand quantitative data and qualitative information, to support the secondary research sources and progress on the discussion in the solutions. Besides, the primary research will help justify the feasibility and the credibility of the project hypothesis. Since the project is aiming at building a new VM strategy with digital

technology incorporation, I will investigate the target consumers’ thoughts and shopping behavior toward the digital application through interviews and questionnaire questions, I will also get insights into the industry trends of luxury VM with industry professionals through interviews. The evaluation of responses from the findings will support the strategy construction. 2. Primary research goal In the primary research, the first method I will conduct is the consumer survey written in bilingual languages, Chinese and English, through Google Form (See Fig.18) and Tencent survey (See Fig.19), to collect responses as more as possible from Chinese luxury consumers in the goal of 200 effective responses. Google Form is general used worldwide and Tencent survey is commonly used among the Chinese. In the survey, I aim to gain the insights of the general perceptions on the luxury brand CELINE, the Chinese luxury consumption, and future customer behavior and thoughts associated with the incorporation of digital technologies on Visual Merchandising in China.

Figure 18. Google Forms

Figure 19. Tencent survey

The second method I will use is interviewing target consumers and industry professionals in one-on-one basis and in group form. I aim to gain the deep insights of the Chinese luxury consumption, future customer behavior and the brand awareness from the target audience. From the interviews with industry professionals, I aim to know CELINE’s Visual Merchandising guide and formula, the real relationship of CELINE and Chinese customers, store design and Visual merchandising trends in the global marketplace and Chinese market in depth. The ultimate goal of the primary research is to enhance the findings from the secondary sources and support the hypothesis of incorporating digital technologies on VM for CELINE in China by convictive background sources, brand analysis, and market analysis. 3. Primary research Method 1: Survey The consumer surveys aim to collect both quantitative and qualitative data for result evaluation. 3.1 Target audience Since the project is associated with the Chinese luxury VM and consumers, the

target consumers for this survey are Chinese luxury customers and potential customers who may purchase luxury goods, ranging from teen ages to 40ish years old, living in mainland China, and have nationality of People’s Republic of China. The target consumers have luxury consumption experience, and may have interest in brand engagement, art and gallery, as well as digital technologies. They may shop online and offline, but they expect special shopping experiences in the physical stores and are willing to join in luxury retail events. 3.2 Plan for execution I aimed to collect 200 responses in total from Google Form and Tencent survey. On these two platforms, I designed 13 questions, 12 of which are single-choice questions, and the last question is a short answer question. There is a brief description for the project rationale and answering guidance. To publish them online, Google form provides a link (See Fig.20) and Tencent survey creates a link and a QR code for me to share with people (See Fig.21). In addition, Tencent survey has additional service to publish it to the most relevant customers based on my settings. The receivers can enter the website to answer the questions by clicking on the link or scan the QR code on digital devices like mobile phone, tablets and computers.

Figure 20. The shared link of Google Form (Google Form, 2022)

Figure 21. The shared link and QR code of Tencent survey (Tencent Survey, 2022)

After a week collecting the statistics, I ended up having 177 responses in total - 28 responses on Google Form and 149 responses on Tencent survey. 3.3 Survey questions and responses There are 13 questions in total. The first five are the demographic questions; question 6 to 13 are the psychographic investigation (See Appendix A and B). The survey questions and responses are listed below: 1. Gender 2. Your Age 3. Your location in China (Economic Regions)

4. The nearest city of your location 5. Average disposable income per year 6. How do you like CELINE? 7. Which part of CELINE attracts you the most? 8. If CELINE applies AR/VR/Hologram technologies on product displays, brand history narratives, embodiment of Slimane's aesthetics on VM in store, which digital technology would attract you the most to enter a luxury store, stay in store and even make the purchase? 9. Which digital technology applied on VM would attract you the most to enter a luxury store, stay in store and make the purchase? 10. Which digital technologies on VM in the new CELINE stores would keep you staying in store longer and even make the purchase? 11. After having a lot of fun interacting with these digital technologies in a CELINE store, you are motivated by the holistic performance of VM to purchase your dream items. How much are you willing to pay per purchase at one time? 12. After this unique in-store experience, you want to revisit the same or another CELINE physical store in China because of: 13. Are there other digital technologies applied on VM that would attract you to visit a CELINE store?

4. Primary Research Method 2: Interviews The interviews aim to collect qualitative data for result evaluation. 4.1 Interview of industry professionals The industry professionals I invited are a visual merchandiser, a digital merchandiser, a store designer, two CELINE China staff, the general manager in LVMH Taiwan. Basically, the interviews are one-on-one basis. Only the interview for CELINE China staff is in a group meeting. 4.1.1 Goal The interview with industry professionals aims to gain industry insights including the trends of visual merchandising in luxury retail spaces in China, digital technologies that have been commonly used by luxury brands in China, the consumers’ reactions and expected effects on digital technologies in new CELINE stores in China and the professionals’ perspectives on the VM strategy of incorporating digital technologies for CELINE to discover the efficiency and effectiveness between consumers’ reactions and projected financial performances. 4.1.2 Interviewee background Scott Yu, a Xiamen-based store designer who had worked for a Chinese luxury brand SANKUANZ and has more than 3 years working experiences in both store design and landscape design. We will discuss about the definition of store design in

China, the relationship between store design and VM, the trends of store design, interior design and VM in mainland China. Beryl Jiang, a Chinese senior visual merchandiser, working in luxury industries for 12 years in mainland China. She will provide her perspectives on VM trends in luxury retail spaces in China, luxury customers’ shopping habit, and the recommendations for building digital technologies on VM in CELINE’s physical stores. Efsun Yilmaz is a European merchandising operations coordinator at the sport brand -NIKE in Europe headquarters. She used to be a digital merchandiser in Scotch & Soda, a visual merchandiser in PUMA, and site merchandiser in Calvin Klein with over 7 years working experiences in the fashion and luxury industries. From the conversation with Efsun, we will talk about the trends in digital merchandising and VM in the global luxury marketplaces, and the application of AR, VR, and 3D Hologram in Europe. Chloe Hu and Andy Xie are CELINE’s store staff in China. Chloe was working in CELINE boutique in Kunming City for one year, and Andy has been working in CELINE stores in Guangzhou area over 2 years until now. I will hold a virtual group meeting with them on ZOOM, an online video meeting application, and will talk about Chinese consumers’ perspectives on old CELINE and new CELINE, the

workflow of VM part in-store, CELINE’s VM guide, and their view on incorporating digital technologies on VM. The information will offer me the structure of CELINE’s VM guide as the background, and project the new VM strategy after evaluating the target customers’ potential reactions. Jackie Wu, the General Manager of LVMH in Taiwan market, has worked for Dior and Louis Vuitton in LVMH group for more than 14 years. The conversation with Jackie will focus on the VM guide of Dior and Louis Vuitton, and the physical store expansion plan in the East Asia market, and how LVMH group perceives the trends of digital technologies for applications. Further details of the interviewee’s background and conversation transcripts are documented in the Appendix at the last part of the project paper (See Appendix C to G). 4.2 Interview of target consumers A group interview with 3 Millennials and generation Z Chinese luxury consumers who have more than 5 years luxury shopping experience and have been visiting CELINE’s physical stores in China. 4.2.1 Goal The interview with target consumers is aiming to gain the insights into the key events that is happening in luxury retail and consumers’ reaction in China, deeper

perceptions on CELINE, perspectives on digital technologies in luxury retail, perspectives on digital technology incorporation on VM in a CELINE store, and expectation on digital technologies in new CELINE stores in China. 4.2.2 Interviewee background A group interview with 3 Chinese luxury consumers who have more than 5 years luxury shopping experience, and belong to the Millennials and generation Z. Liz Jiang, a 30-year-old graduate student majoring in Luxury and Brand management and has about 6 years of luxury consumption. She has been working and living in Shenzhen city, one of the top-tier cities in China for more than 5 years. Her response may represent the late Millennials group’s perception of the luxury brands in China, as well as luxury shopping experience in brick-and-mortar. Vanney Heng is a 25-yearold fashion buyer, social media influencer and with an educational background ins fashion management. She has about 5 years of luxury shopping experience and has worked in luxury and fashion industries for 2 years so far. Her response will reflect the Chinese gen Z luxury purchasers’ thoughts on the luxury promotion and campaigns of luxury brands in China and provide the suggestions for the digital application on VM in the physical retail stores. Xiao Tan is a 22-year-old undergraduate student in Fashion Marketing major, who is the big fan of the luxury brand CELINE and Balenciaga. She started to purchase luxury items since she was a

teenager and has accumulated at least 5 years luxury shopping experience at brickand-mortar sector. Her response may represent the typical generation Z’s shopping habits, behaviors and preferences for luxury shopping, and the deep understanding of CELINE’s popularity among the target audience. Further details of the interviewee’s background and conversation transcripts are documented in the Appendix at the last part of the project paper (See Appendix H). 5. General Findings of Primary Research Based on the quantitative and qualitative results I got from the primary research, my findings are listed in the following paragraphs: In terms of demographic questions 1 to 5, there are 66% female and 34% male respondents, showing that CELINE, which was a brand exclusive to women, has gradually been aware by male customers. There are 55% of respondents in the age of 10 to 25 years old, and 41% of respondents are in the ages between 26 to 40, which means that generation Z accounts for 55% and Millennials shares 41%. These two groups are the dominant purchasers in China now and in the future, and generation Z has a bit more purchase power than Millennials. 61% of respondents are in East economic area while 33% of them are located in Central and Western area, showing that the main luxury shoppers are still live in East area. According to CELINE’s store locations in each city in China, the top 4 cities that the most respondents live or live

nearby are Beijing, Shenzhen, Shanghai, and Chengdu. These four cities are ranked as top-tier city list as well, accommodating a great number of populations and business opportunities. The average annual income of the target consumers is 60000 RMB, with over 50% share on both forms, and accounts for 67.1% in total. This level of disposable income is affordable for CELINE’s items priced from 1000 RMB to 50000 RMB. There are more than 74 % of people love, like, and accept CELINE, which means the majority of the general shoppers are holding a positive perception toward this luxury brand. Though the largest portion of people are “feeling not bad” with CELINE, they are attracted by new CELINE style with designer Hedi Slimane’s aesthetics. In terms of the new CELINE’s identity among the Chinese luxury communities, it is more energetic, youthful, and approachable, while the brand still remains the spirit of contemporary minimalism embodied by the new retail stores. However, Hedi Slimane’s CELINE sometimes confuses luxury customers with the competitor, SAINT LAURENT, for which Hedi Slimane had work before. CELINE has its own Visual Merchandising guide for each store globally. The flexibility for local VM team to develop creativity on VM is limited because the headquarters from Paris will assign professional VM team to each market in each

region, including China. Digitalization and technologies are main trends in both VM and luxury retail spectrum globally and in China. Among AR, VR, and hologram, AR is the most common tactics luxury brands have used across beauty, cosmetics, apparels, and leather goods sectors, and embraced by target consumers widely with over 50% support in the survey as well as identified by the professionals. Due to the pandemic, people still care about the sanitary issue. VR technology involves in wearing headset devices might deter people to use it for experience. For hologram, it is recommended to applied in a large scale and performed in venues like museum. The effect will be stronger than the hologram projector for product in store. If VM in the brick-and-mortar will incorporate the digital technologies, it involves a strong marketing strategy or campaigns to support it. Besides, it is recommended to start from the signature store in the top-tier cities like Beijing and Shanghai, where the customer base is huge enough to create a buzz and catch potential customers’ attention, to test the water and evaluate Return on Investment rate (ROI) before and after. Except the selected digital technologies of AR, VR, and hologram for VM, Artificial Intelligence is also popular to be installed in brick-and-mortar among the

luxury companies and customers. The application includes digital boards, interactive mirror, inventory tracking, customized services, and other interactive functions for product showcasing. Except from digital technologies on VM that would attract people to visit a luxury retail store, the creative lighting and five sensory are also appealing to customers. They expect the immersive ambience created by the shifting beams of light, video screen playing and the charming scent.

IV. Solutions 1. Introduction Based on the brand research, industry research and primary research and findings, the following discussions, limitations, and recommendations support the suggestions of a new visual merchandising strategy of digital technology incorporation for CELINE in mainland China. 2. Discussion With the trend of phygital world, digital technologies have been gradually adopted in luxury retail by luxury brands and widely embraced by the Chinese younger customers over past few years and will last in the next few years. Based on this fact, the entire luxury and fashion world are facing a huge change in branding, marketing and VM. All the strategies should consider the digital application in all channels in

this omnichannel era, at the same time, the activities should tie closely with the brand image, brand identity, and brand heritage. The incorporation of digital technologies on VM is no longer limited to the visual feast, but any VM strategies should center around the brand itself. In the omnichannel era, Chinese consumers are shopping online mostly, and the pandemic accelerates the growth of E-Commerce. However, physical retail still has opportunities to bounce back because people still desire for the real human connections, touch and feel due to the human nature. The new form of retail space, phygital, provides a new way for the brand to engage customers who are attracted by the immersive and interactive experiences, even in the luxury stores. The new VM strategy is developed based on the brand analysis and market analysis. Above all, VM serves as a silent salesman for the brand, should always be developed based on the brand heritage and DNA, representing the brand, and conveying the correct messages to customers. 2.1 Brand Analysis Before proposing a new VM strategy, a well-constructed brand analysis is essential because every marketing practice should center around the brand image, equity, and identity. The brand analysis will include the subdivisions of brand identity, the brand mission statement, brand positioning, and SWOT analysis.

2.1.1 Brand identity Under Hedi Slimane’s creative leadership, new CELINE is injected into a sense of youth energy. The inspirations of Hedi Slimane are from CELINE’s heritage of 1970’s retro bourgeois, American sportswear introduced by Michael Kors, and his own edgy skinny, dark rock style. These elements are well blended with the old CELINE’s spirit of contemporary minimalism, reintroducing CELINE with a brandnew appearance in front of luxury and fashion communities through the curation of collections as well as redesigned retail spaces. According to Kapferer’s prism (Fig.22, Kapferer, 2012), the brand identity can be diagnosed by six aspects - physique, personality, relationship, culture, reflection, and self-image. New CELINE’s physique are Parisian classicism, comfort, sporty girl, contemporary minimalism, monochrome, and neo-Romanticism. New CELINE’s personality is authentic, independent, dark rock, punk, bold, strong and timeless. The relationship between new CELINE and the target customers are personalization, high quality assurance, and special in-store experience. The cultures of new CELINE are Parisian bourgeoisie and exquisite craftmanship. The reflection of CELINE is individualism, clear-cut design, mix of minimalism and street rock. Lastly, the selfimage of CELINE is effortless chic, classic, comfort, minimalistic, elegant, brightness, and western art de vivre.

Figure 22. Kapferer’s prism for CELINE (Kapferer, 2012)

2.1.2 Brand Mission Statement CELINE does not have an official mission statement listed on their website, but the mother company LVMH did provide the mission statements for each segment. CELINE is in the fashion and leather goods division, and the mission statement is “Our business model is anchored in a long-term vision that builds on the heritage of our houses and stimulates creativity and excellence. This model drives the success of our group and ensures its promising future” (LVMH, 2022). 2.1.3 Brand Positioning Always upholding Parisian Chic style, CELINE remains the contemporary minimalist aesthetics yet welcomes new and trendy elements of avant-garde, American sporty, punk rock, retro bourgeois into the brand. Hedi Slimane's participation brings a stream of youth into this traditional classic environment and

stirs the younger generation's desire for CELINE successfully. 2.1.4 SWOT Analysis The SWOT analysis identifies the brand’s strength, weakness, opportunities, and threat in the competitive marketplaces and provides a background information for all marketing practices. Evaluating a brand by SWOT analysis is paramount before any strategy. CELINE’s strengths are its brand awareness and strong emotional connections with its customers. Especially in China, LISA’s endorsement brings the communities more closely. Another advantage is the brand’s abundant heritage associated with Parisian spirits. The concept of “Effortless Chic” is always linked to CELINE. Powered by the largest fashion conglomerate LVMH, CELINE becomes a strong competitor among other meta luxury brands such as Gucci and Dior when it comes to leather goods and ready-to-wear collections. The weakness of CELINE is that the brand image is going younger and may lose the elder customer bases. In addition, the acceleration of E-Commerce sales and digital strategies may be seen as a drawback in terms of exclusivity and rarity. The opportunities for CELINE are sufficient room for progress. The new branding strategy leads the brand to a wider customer base due to the newly launched collections and compelling retail design. Besides, CELINE has currently focused on

its digital strategies supporting the phygital development and offering customers a more seamless customer experience at brick-and-mortar. The threat for CELINE is coming from other luxury brands who offer the similar products like leather goods. Another threat for CELINE is the pricing strategy. Recently, CELINE has leveled up its price scale, aiming to keep abreast of the supreme luxury brands such as Hermes and Chanel. This practice triggered a huge reaction among the younger customers who do not bear higher affordability. On the other hand, people in China may think CELINE is in an embarrassing situation since CELINE is not listed on the same level as Chanel and Hermes, so the premium pricing strategy might deter potential customers to purchase, even worse, pushing them to buy competitors’ similar items. 2.2 Market Analysis 2.2.1 Target consumer and Personas The target consumer of CELINE is the group with middle-high socioeconomic status, and decent disposable income. They are more likely to purchase at upscale establishments and possess their own property. They are financially secured and prefer to purchase only high-end clothing and furnishings. They tend to have strong personalities and are natural-born stylists, effortlessly styling themselves. Additionally, they place a premium on their image and the messages they convey.

In terms of lifestyle, CELINE's customer places a premium on their image and typically lives a wealthy lifestyle. They spend on high-quality goods such as cuisine, wine, clothes, furnishings, and automobiles. When they travel, they prefer to stay in luxury resorts and hotels and dine at great restaurants. Several personas are shared in the following paragraphs. Xue Hu is a 29-year-old magazine chief editor who lives and works in Malaysia. Her disposable annual income is around $240K (USD). She is a meticulous individual who values quality and craftsmanship. Celine fits her lifestyle because she purchases all her workwear from them. She is always flawlessly dressed. When she wakes up in the morning, she enjoys an Americano and reading the news. In her spare time, she loves to visit museums and exhibitions, and having afternoon tea with her friends. Jia Chen is a 20-year-old college student who is a typical generation Zer. She loves shopping with her friends and keep abreast of latest fashion trends. She is a big fan of K-POP member LISA, and always keeps a keen eye on the popular items LISA carries in any event or daily routine. She has her own style of street fashion and loves to do styling for her peers. Andrew Brown is a British sales associates in a fashion label. He is 32 years old, and his disposable annual income is $130K (USD). He has a great sense of dressing style and possesses a perfect wardrobe based on his aesthetics. He enjoys photography

and playing games in his free time. He also has reading habit every day to keep up-todate news. He is always attracted by novel technologies while shopping in the physical world. 2.2.2 Competitive analysis The direct competitors of CELINE in mainland China are SAINT LAURENT, Prada, and GUCCI based on the matrix of pricing, products, target market and consumer type. These luxury brands are offering couture, ready-to-wear (RTW) of fashion and leather goods mainly in the market. The pricing of CELINE falls between $1100 to $20000 on average, and $400 to $30000 of SAINT LAURENT, $700 to $12000 of PRADA, $300 to $40000 of GUCCI. The similar product types of these brands for the similar target consumers in mainland China are ready-to-wear (RTW) and bags. The indirect competitors of CELINE in mainland China are DIOR, GUCCI, BURBERRY, and Louis Vuitton who have implemented digital technologies successfully and caused a buzz between luxury communities over past 5 years in mainland China. Digital technologies have gradually embraced by luxury and fashion brands because of the industry trends and customers’ expectations. Some luxury brands, such as GUCCI and DIOR, have shifted toward going younger in strategies and business model driven by the dominant purchase power of younger generation. In

addition, under the pandemic, brands were forced to develop the virtual communications to engage the consumers and boosted the sales. In mainland China, E-Commerce has prospered for years, and Chinese consumers have gotten familiar with the shopping model virtually. Based on these facts, to capture luxury consumers in mainland China, luxury brands innovate with technologies across the realms of marketing to VM in online and offline channels. 2.2.2.1 Direct competitors

SAINT LAURENT, a French luxury brand founded in 1962 by fashion designer Yves Saint Laurent in Paris, maintaining its strong growth trajectory with powerful products and iconic brand style, blending with the former head designer Hedi Slimane’s personal dark rock style, has lasted Le Smoking signature of Yves Saint Laurent’s heritage successfully. Due to the overlapping design style of street rock’n’roll, Hedi Slimane’s CELINE is frequently confusing the customers in mainland China. Besides, the identical pricing ranges of two brands are in the affordable luxury level which has been another concern of customers while they are shopping and making purchase decisions.

PRADA, the brand of well-blending in classic elegance and eccentric style, pursuing extraordinary craftsmanship spirit, is an Italian luxury house formed by

Mario Prada in 1913. Over 100 years, the brand insists in details of quality and material selection, innovating with time and consumers’ taste that wins the huge success in the luxury world. Chinese customers choose PRADA because of its uncompromising quality and product design, featuring handful functions and has become the main competitor of CELINE due to the similar pricing level.

GUCCI is another dominant fashion house competing with CELINE. Founded in 1921 in Florence, Italy, the house has accumulated long lasting tradition and rich Italian heritage over decades. However, the brand had faced the decrease in 2013 due to the old and cliché appearance in products and brand image. After repositioned in 2015, GUCCI has refurbished and rebranded by creative director Alessandro Michele with a youthful, colorful, and playful brand image, which aims to allure the new generation’s heart. The business strategy has obviously been retargeted younger customer base, especially the huge population of generation Z who appeal to experiential shopping experience in China. With the edgy and avantgarde design style in products along diverse interactive marketing engagements online and offline, GUCCI has succeeded lured the young customers’ attention and increased the sales growth these years. The brand upholds the personalized services and keeps evolving with latest technologies to engage the young customers in China. CELINE’s new branding strategy is obviously targeting young customers too.

CELINE has opened more and more channels from offline to online to reach potential customers in China due to the customers’ shopping behavior and expectations for the shopping experience.

2.2.2.2 Indirect competitors DIOR, a French luxury house founded in 1946 by fashion designer Christian Dior, has grown into a main player in luxury and fashion industries over decades. The brand has two sectors which are Christian Dior Couture and Parfums Christian Dior. Both segments have adopted and applied digital technologies mainly because of the dominant purchase power in Chinese luxury market are the younger generation. To engage with the future customers, DIOR has already implemented the digital strategies, utilizing digital technologies in online and offline channels. In fact, DIOR is the first luxury brand enrolling on Douyin (Tik Tok). In 2015, DIOR had invented its VR headset called DIOR Eyes to offer immersive experience of runway shows for customers. Since 2018, DIOR has implemented AR filters on social media for virtual try-on and opened its virtual beauty boutique on Avenue Champs-lyses in Paris online, creating the VR shopping experience for the Chinese consumers who cannot visit the physical store in Paris. In 2022, DIOR collaborated with Meta Media, holding the first Metaverse fashion runway show “On the Road” in China. Digitalization is the evidence that fully embodies the brand is going younger.

GUCCI is famous for its AR filters too. GUCCI has launched a feature on its IOS app creating the AR experiences on its line of ACE sneakers. Through the filters, customers can visualize the try-on effects on their digital devices instantly. Besides, WeChat and Taobao are popular platforms among the young Chinese customers that GUCCI also offers AR try-on services to create the immersive online shopping experience. After ordering products online, customers can pick up items in the physical stores. This practice presents the seamless shopping experience from online to offline, optimizing the customer journey. BURBERRY, another giant in luxury and fashion world, is established in 1856 by Thomas Burberry in the Great Britain and has become the A-list megabrand over more than 160 years. Burberry has built its AR bag showcasing in the physical stores and VR shopping experience in both online and offline places over past few years with its forward-looking vision, utilizing digital technologies to drive sales and bringing customers phygital shopping experiences. BURBERRY even collaborated with Google search technology for customers to experience the products embedded in their surroundings in 2017, and this AR practice led other brands such as DIOR and Louis Vuitton to dive into online AR experience creation in Chinese luxury market too. Besides, BURBERRY fully implemented Artificial Intelligence for product information and purchase functions in the brick-and-mortar, offering customers dual

experiences of online and offline. Louis Vuitton, the old luxury French Maison founded by trunk maker Louis Vuitton in 1854, is also one of the important players in Chinese luxury market. Along the digital trend in luxury industries, Louis Vuitton incorporated AR technologies on the 2021 SS fashion show, augmenting the visual feast for fashionistas around the world. Louis Vuitton has had several exhibitions in China since 2018, utilizing the technologies on lighting and displays to create an immersive space for visitors. Through the art of visual displays, Louis Vuitton utilized technologies such as AR, VR, and Artificial Intelligence to convey the brand’s heritage and histories to each consumer who expects interactive shopping experience. In addition, the extraordinary performance Louis Vuitton has utilized technologies is the future canvas bags collection. Louis Vuitton has created the fusion of technology on its future canvas bags collection, blending well with the label’s iconic elements and elegance, becoming the leading pioneer in the digital product design and flexible displays in the industry. 2.2.3 Communication channels For the launching of new VM strategy, the marketing communication channels will utilize both traditional and digital channels to promote the new retail spaces with the new VM strategy to the target customers. The traditional platforms will use Out of

Home (OOH) poster, magazine advertising and the opening day events inviting influencers and KOC for customer engagement. The new retail places with digital technology incorporation will be promoted via social media including Weibo, WeChat, Little Red Book and Douyin, official websites and online magazine media. The synergy of these two channels is to bring potential customers from offline to online, and from online to offline, which means, once customers see the ads in the real world, they can scan the QR code printed on posters to the online webpages for more information. The information online will lead people to visit physical stores and immerse in the real spaces with virtual experiences. After a deep dive into the brand analysis and market analysis for CELINE, I suppose it is important for the luxury brand CELINE to utilize digital technologies on VM to create immersive and interactive experiences in brick-and-mortar for the target customers. AR is the most economical and approachable technology and is the most popular selection within the target consumers in this project research, so the solution of the project will be the AR prototypes on VM within CELINE’s stores in China. Even though digitalization is the popular and inevitable trend nowadays, the application of digital technologies should not be the core across all activities for a luxury brand. After all, digital elements are just a way to deliver and express a brand’s personality and a tool to interact with the contemporary customers in this era.

3. Limitations The limitations for building a new visual merchandising strategy of digital technology incorporation for CELINE in China are the budgets and the flexibility of creative VM. The common digital technologies in luxury retail, referring to Augmented Reality (AR), Virtual Reality (VR) and 3D Hologram, are popular with the Chinese customers while on the brand’s end, the costs of installation and cooperation with external IT team are expensive. Luxury brands that have adopted the digital technologies as marketing tools usually outsource to external teams to execute, and the hiring price varies based on the quality and effects. In addition, the maintenance fee needs to be considered into the budget after installation. The risk of damage and depreciation happen along the usages and life duration of technologies. Last but not least, some areas are not developed fast enough, so the budget allocation for CELINE’s stores varies. From this standpoint, some branches are not considering the incorporation of digital technologies from the view of ROI due to low population density and foot traffic. Another limitation is the flexibility of creativity on visual merchandising. Since CELINE has its existed structure of visual image and in-store merchandising, each store around the globe is following the VM guide written in a brochure from the

headquarters in Paris. The wall design, product displays and allocation, fixtures and fitting, lighting, music and smell, footfall are basically the same throughout the world, but the stores are allowed to have slight differences on store design, focal points and visual displays in each section, depending on local customs and product inventories. Thus, to build digital technologies in CELINE’s Chinese stores are limited to the store sizes, local cultures, and available stock. In addition, CELINE will send the VM team from headquarters to each market area regularly, to check the store VM and maintenance, and leave restriction to creative development for store staff, and even the associated local visual merchandisers. The idea of localization is limited due to the fixed big picture sent from the headquarters. 4. Recommendations for future research After considering the limitations, the future research for incorporating digital technologies on VM for CELINE in the Chinese market needs more in-house information. Since the budgets in each Maison of LVMH is highly confidential, it is not easily to access the exact data, financial performances in retail operation sectors, and precise kinds of product allocation in each CELINE store. Even though I have reached out to CELINE store staff for the brand’s operational information, it is hard to dive deeper into details in every aspect of VM. Thus, the recommendation for further research is to connect with CELINE in-

house team members or core executives to have more conversations about every aspect of VM, budget projections, and their suggestions on digital technology incorporation in brick-and-mortar. 5. Suggestions 5.1 Visual Merchandising Strategy 5.1.1 Location Selection To implement the new VM strategy, it is advisable to start from the flagship stores in Beijing, Shanghai, Shenzhen, and Chengdu based on the ROI evaluation, to dip a toe the market reaction. The flagship stores in these four cities are the orientations for all stores in China because of the high population density and the dominant shopping areas that Chinese luxury shoppers located. 5.1.2 CELINE’s existed VM guide The new VM strategy will be based on the existed VM guide with elements of natural stone, black marble, steel mirror, wood and concrete (Wrigley, n.d.). The store design and in-store foot fall remains the same. Music is the specific playlists selected by Hedi Slimane, and smell is from the Haute Couture perfume collection by CELINE. Each store applies different scents in store. The in-store ambience is gallery-like spaces exuding a sense of approachable luxury and home décor feel. In terms of product displays, each item remains an equal distance between each other on the rail

and fixtures (Fig.23, Windowswear, 2022). The star products are placed at the focal point in each store and changed from season to season (Fig.24, Windowswear, 2022). The special in-store spaces are designed for rest areas with furniture (Fig.25, Windowswear, 2022). The color scheme and product displays are changed every two to three months on the regular basis (Fig.26, CELINE, n.d.)

Figure 23. Equal distance between items on the rail. (Windowswear, 2022)

Figure 24. Focal point is always placed star products (Windowswear, 2022)

Figure 25. Spacial in-store spaces with rest areas (Windowswear, 2022)

Figure 26. CELINE Shanghai in-store merchandising (CELINE, n.d.)

5.1.3 Digital Technologies installation prototypes on VM The first prototype using AR technologies are the virtual try-on and other interactive functions on digital mirrors or digital boards between in-store merchandising.

The second prototype is an in-store activation of AR screen filters to take a closer

look at products that are currently out-of-stock in the physical stores by scanning QR code provided in-store to access.

5.2 Other digital application prototypes Utilizing dynamic lightings to create different visual effects in a specific area instore can enhance the five sensory experiences combining with the background music and scent in store.

In addition, a designated area for social media moment is important for KOL and KOC to engage with the brand, promote the brand and increase the brand awareness in China. For instance, the glass floor in CELINE Chengdu flagship store.

Large-scale digital screens can be used to play videos, like fashion shows, brand story or craftmanship, making VM as a storyteller to introduce the brand to potential customers in brick-and-mortar.

Brand logo is the first impression popping into people’s mind. Stressing on the signature icon everywhere from external to internal, from retail spaces to products, and from online to offline will enhance customers recognition for CELINE and augment the brand awareness in China.

V. Conclusion By exploring the opportunities for the application of digital technologies on VM, I have a deeper understanding of industry background, the power of VM, and current Chinese luxury consumers shopping behavior. From the literature review, I focus on the brand CELINE, the industry background in luxury retail, and the role of VM in the luxury physical stores. The information supports my hypothesis to build a new VM strategy by digital technologies for the target market, and progress on the primary research. Through the field investigation from consumer survey of 177 respondents and interviews with 6 industry professionals and a group of target customers, the feedbacks consolidate the justifications of the project topic and reinforce the secondary sources. After collecting the sufficient evidence, and evaluating them with my findings, my final solutions are the brand analysis, the market analysis, and a new VM strategy of digital technologies incorporation. The focus is the VM strategy supported by the brand analysis and the market analysis, to provide the prototypes based on the customers’ expectations. In conclusion, this project aims to propose the feasible strategy interpreted in visual merchandising for CELINE in order to accelerate and consolidate the market share and sales growth via increasing brand awareness in mainland China. If CELINE

intended to utilize digital elements on VM, it is advisable to launch along with the proper digital marketing strategy since VM is a part of marketing practice. CELINE has accumulated decent reputations among the Chinese luxury customers and if the brand extended to digitalization and technologies, it would definitely open a new niche market and have a wider customer base. However, it should be cautious to execute the digital strategy to avoid possible brand deterioration. Future consumers are getting more well educated, so as their shopping behavior. These aspects need to be considered for the further development on VM strategy.

VI. Glossary Customer Retail Experience: Customer retail experience means the feelings of customers while they are shopping in the physical retail stores along the customer journey. The customer experiences can be affected by the visual displays and in-store ambience that brands aim to create for its target market.

Visual Merchandising (VM): Visual merchandising is one of marketing approaches to sell the products through the practices of store design, window and in-store visual display, lighting, music or other sensory elements to attract customers’ attention to visit the sites and keep the customers in store. The purpose is to encourage purchasing,

to strengthen customers’ satisfaction, and to make the purchase.

Digital technology: Digital technologies refer to the electronic tools, computer systems, smart devices that have the functions of storing, processing, and outputting the data. Now the digital technologies are widely used in different areas and marketplaces.

Millennials and Generation Z (MillZer): Those who born between 1980 to 1994 are the age generation called Millennials; generation Z is born between 1995 to 2009 and is the first generation growing up with digital devices, such as smart phones. These two generation groups are the potential future consumers for the most of consumption and are called “MillZer”.

Augmented Reality (AR): Augmented Reality is one of the digital technologies that generates virtual imageries via computer systems for people to experience in the real world.

Virtual Reality (VR): Virtual Reality is one of the digital technologies that extending from augmented reality to a totally virtual world. Usually performed through specific

gadgets such as headsets and provided people with the virtual experiences through the computer-generated scenario and 3D imageries.

Hologram: Hologram is also called Holography, is a virtual 3D image formed by the light beams from a laser and other lighting sources, giving viewers a virtual vision of an object or a figure. Hologram is categorized as one of the digital technologies.

Phygital: Phygital is the combination of physical and digital using technologies to bridge the virtual and real world in order to provide users interactive experiences.

Omnichannel: Also spelled as Omni-channel, is a multi-channel approach combining the online and offline channel functions in order to provide a more seamless shopping experience for customers. VII. References Batat, W. (2019). Digital luxury: Transforming brands & consumer experiences. SAGE. Bowstead, J.M. (2015). Hedi Slimane and the reinvention of menswear. Intellect, 2(1), 23-42. https://0-doi-org.library.scad.edu/10.1386/csmf.2.1.23_1

Chevalier, M., & Gutsatz, M. (2020). Luxury retail and digital management: Developing customer experience in a digital world (Second ed.). John Wiley & Sons Singapore Pte. Celine Pop Up Store - Luxury Retail. (2019). https://luxuryretail.co.uk/celine-pop-up-store/ CELINE PARIS. (n.d.). LVMH. https://www.lvmh.com/houses/fashion-leather-goods/celine/ CELINE CHENGDU TAIKOOLI. (n.d.). CELINE. https://stores.celine.com/zh_hans/sichuan/chengdu/no8-middle-shamao-street Celine Jewelry Pieces that center the brand’s triomphe. (n.d.). The New York Times Style Magazine. https://www.nytimes.com/2021/11/12/t-magazine/celine-triomphe-jewelryparis.html CELINE summer 22 Shanghai Pre-sale campaign. (2022). Little Red Book. http://xhslink.com/zFGjVg Chen, C., Levene A., Walker, E., Schoening, D. (2021). Building loyalty through brick-and-mortar Retail.| Inside Fashion. The Business of Fashion Podcast. https://www.businessoffashion.com/podcasts/retail/building-loyalty-throughbrick-and-mortar-retail/

CELINE BEIJING. (n.d.). CELINE. https://www.celine.com/en-us/celine-maison-decouture/store_architecture/celine_beijing/ CELINE BEJING SKP SOUTH MEN&WOMEN. (n.d.). CELINE. https://stores.celine.com/en_fi/beijing/beijing/shop-d1021-skp-s-86-jianguo-road CELINE SHENZHEN MIXC. (n.d.). CELINE. https://stores.celine.com/en_gb/guangdong/shenzhen/no1881-baoan-south-road mensuno. (2021). The grand opening of CELINE’s brand-new flagship store in Plaza 66, Shanghai. Sina. http://k.sina.com.cn/article_1223849864_48f2778804000srkb.html#/ Dudbridge, S. (n.d.). Céline. CATWALK YOURSELF. http://www.catwalkyourself.com/fashion-biographies/celine/ Dijokas, D. (2019). Is Hedi Slimane employing a strategy for Celine? _Shift. https://www.shiftlondon.org/features/is-hedi-slimane-employing-a-strategy-forceline/ Does it work well with Hedi Slimane’s aesthetics of CELINE among consumers? (2022). SA 123. https://sa123.cc/mhm8s219jtbfe6pobz54.html Euromonitor International. (2022). Luxury Goods Market size. Euromonitor

International. https://0-www-portal-euromonitorcom.library.scad.edu/portal/dashboard/DashboardDetails Euromonitor International. (2022). Personal Luxury Market size. Euromonitor International. https://0-www-portal-euromonitorcom.library.scad.edu/portal/dashboard/DashboardDetails Francis, T., Rambourg, E., Gilsenan, S., Stephen, D. (2022). Where Consumers Will Buy | Retail Reborn Season 2. The Business of Fashion Podcast. https://podcasts.apple.com/us/podcast/which-consumers-will-buy-retail-rebornseason-2/id1225204588?i=1000556194930 Guilbault, L. (2021). LVMH fashion sales climb despite concerns in China. VOGUE BUSINESS. LVMH fashion sales climb despite concerns in China | Vogue Business HOUSE HISTORIES: THE CELINE TIMELINE. (2020). HUATE HISTORY. https://www.hautehistory.co.uk/celine-timeline/house-histories-the-celinetimeline Hedi Slimane named Artistic, Creative and Image Director of Céline. (2018). LVMH. https://www.lvmh.com/news-documents/news/hedi-slimane-named-artisticcreative-and-image-director-of-celine/ Kapferer, J. (2012). The new strategic brand management: Advanced insights and strategic thinking (5th ed.). Kogan Page.

LVMH 2021 Annual report. (2022). LVMH. LVMH_2021_Annual-Report.pdf (fluidbook.com) LVMH Sales Top $71 Billion in 2021, Helped By Fashion & Leather Goods. (2022). TFL. https://www.thefashionlaw.com/lvmh-sales-top-71-billion-in-2021-helped-byfashion-leather-goods/ Larigakis, S. (2020). The Celine Art Project Makes it Possible to Visit Site Specific Works Despite Museum Shutdowns. CULTURED. https://www.culturedmag.com/article/2020/07/30/celine-art-project-makes-itpossible-to-visit-site-specific-works-despite-museum-shutdowns Luxury & Premium 50 2021. (2021). Brand Finance. page 13. https://brandirectory.com/download-report/brand-finance-luxury-and-premium50-2021-preview.pdf Morgan, T. (2016). Visual merchandising: Window and in-store displays for retail (Third ed.). Laurence King Publishing Ltd. Ma, Y. (2022). Luxury goods market in China - statistics & facts. Statista. https://0-www-statista-com.library.scad.edu/topics/1186/luxury-goods-market-inchina/#dossierKeyfigures Ma, Y. (2021). China's share in the global personal luxury market in 2012 and 2018

with a forecast until 2025. Statista. https://0-www-statista-com.library.scad.edu/statistics/977851/china-and-hongkong-share-of-global-luxury-market/ Mahmoud, R. (n.d.). What is Luxury Retail? RETAILDOGMA. https://www.retaildogma.com/what-is-luxury-retail/ Mallevays P. (2021). Reinventing Luxury Retail for the Post-Pandemic Era. Business of Fashion. https://www.businessoffashion.com/opinions/finance/reinventing-luxury-retailfor-the-post-pandemic-era/ Nicoleta. (2022). Visual merchandising trends to follow in 2022. Tokinomo. Visual merchandising trends to follow in 2022 (tokinomo.com) Nicoleta. (2021). Phygital in retail: bringing online and offline together. Tokinomo. https://www.tokinomo.com/blog/phygital-in-retail Nan, L. (2021). Hedi Slimane’s Celine is riding high in China – For Now. JING DAILY. https://jingdaily.com/hedi-slimane-celine-chinese-genz/ Outlet Daily | LVMH will focus on high-end market; CELINE has reached $2 billion euros in annual sales … (2022). Sohu. https://www.sohu.com/a/539298230_121295788

Rees-Roberts, N. (2013). Boys keep swinging: The fashion iconography of hedi slimane. Fashion Theory, 17(1), 726. https://doi.org/10.2752/175174113X13502904240659 Recap on CELINE’s creative designers from the brand’s history. (2018). Tencent Fashion. https://www.gushiciku.cn/dc_tw/109113178 Sabanoglu, T. (2022). Value of the leading personal luxury goods markets worldwide in 2020, by country (in billion euros). Statista. from https://0-www-statista-com.library.scad.edu/statistics/245645/leadingpersonal-luxury-goods-markets-by-country/ Sabanoglu, T. (2022). Value of various global luxury markets in 2021, by market type (in billion euros). Statista. https://0-www-statista-com.library.scad.edu/statistics/246115/value-of-variousglobal-luxury-markets-by-market-type/ Statista. (2021). Expenditure distribution of luxury consumers in China as of June 2021, by age group. Statista. https://0-www-statista-com.library.scad.edu/statistics/1186421/china-share-ofluxury-consumers-expenditure-by-age/ Singh, K. (2020). VISUAL MERCHANDISING: A META ANALYTICS REVIEW.

United States Documents. https://fdocuments.us/document/visual-merchandising-a-meta-analytics-reviewmerchandising-antecedents-of.html Sherman, L. (2018). What Hedi Slimane Means for Céline. Business of Fashion. https://www.businessoffashion.com/articles/luxury/making-sense-of-hedislimane-at-celine/ The new CELINE has won a huge success of rising prices in three rounds, grabbing Chinese buyers (2021). Sohu. https://www.sohu.com/a/470980228_103766 THE MONEY EDITOR team. (2022). Who owns CELINE? THE MONEY EDITOR. https://themoney.co/who-owns-celine/ The luxury market in China: 2021 a year of contrasts. (2022). Bain and Company. https://www.bain.com/about/media-center/press-releases/2022/2021-chinaluxury-report/ The luxury marketing in China: 2021a year of contrasts. (2022). Bain & Company. https://www.bain.com/about/media-center/press-releases/2022/2021-chinaluxury-report/ Vogue Runway team. (n.d.). Celine. VOGUE RUNWAY. https://www.vogue.com/fashion-shows/designer/celine

Windowswear. (2019). Dior Web AR experience. Windowswear. https://0-wwwwindowswear-com.library.scad.edu/ar-vr/ Windowswear. (2019). Gucci’s new try-on AR APP. Windowswear. https://0-wwwwindowswear-com.library.scad.edu/ar-vr/ Windowswear. (2022). Window Displays. Windowswear. https://0-www-windowswear-com.library.scad.edu/windows/

Williams, R. (2021). Is Hedi Slimane’s Celine Working? Business of Fashion. https://www.businessoffashion.com/articles/luxury/is-hedi-slimanes-celineworking/ Wrigley, T. (n.d.). Hedi Slimane turns his hand to interior design for Celine’s global flagships. The Spaces. https://thespaces.com/hedi-slimane-turns-his-hand-to-interior-design-for-celinesglobal-flagships/ Why CELINE started to engage on internet in 2017? (2021). Little Red Book. http://xhslink.com/85mkgh What is Visual Merchandising? (n.d.). RMS. https://www.rmservicing.com/articles/what-is-visual-merchandising/

VIII. Appendix Appendix List of Figures Appendix Figure 1 Appendix Figure 2 Appendix Figure 3 Appendix Figure 4

86 86 87 87

Appendix Figure 5 Appendix Figure 6 Appendix Figure 7 Appendix Figure 8

88 88 89 89

Appendix Figure 9 Appendix Figure 10 Appendix Figure 11 Appendix Figure 12 Appendix Figure 13

91 92 93 94 95

Appendix A. Online form of Consumer Survey: Google Form

Appendix Figure 1

Appendix Figure 2

Appendix Figure 3

Appendix Figure 4

Appendix Figure 5

Appendix Figure 6

Appendix Figure 7

Appendix Figure 8

Appendix B. Online form of Consumer Survey: Tencent Survey

Appendix Figure 9

Appendix Figure 10

Appendix Figure 11

Appendix Figure 12

Appendix Figure 13

1. Gender

(Google Form)

(Tencent survey)

2. Your Age

(Google Form)

(Tencent survey) 3. Your location in China ( Economic Regions)

(Google Form)

(Tencent survey) 4. The nearest city of your location

(Google Form)

(Tencent survey) 5. Average disposable income per year

(Google Form)

(Tencent survey) 6. How do you like CELINE ?

(Google Form)

(Tencent survey) 7. Which part of CELINE attracts you the most ?

(Google Form)

(Tencent survey) 8. If CELINE applies AR/VR/Hologram technologies on product displays, brand history narratives, embodiment of Slimane's aesthetics on VM in store, which digital technology would attract you the most to enter a luxury store, stay in store and even make the purchase?

(Google Form)

(Tencent survey) 9. Which digital technology applied on VM would attract you the most to enter a luxury store, stay in store and make the purchase?

100

(Google Form)

(Tencent survey) 10. Which digital technologies on VM in the new CELINE stores would keep you staying in store longer and even make the purchase?

(Google Form)

(Tencent survey) 11. After having a lot of fun interacting with these digital technologies in a CELINE

101

store, you are motivated by the holistic performance of VM to purchase your dream items. How much are you willing to pay per purchase at one time?

(Google Form)

(Tencent survey) 12. After this unique in-store experience, you want to revisit the same or another CELINE physical store in China because of:

(Google Form)

102

(Tencent survey) 13. Are there other digital technologies applied on VM that would attract you to visit a CELINE store?

(Google Form)

103

(Tencent survey)

104

Appendix C. Interview Transcripts 1

Interviewer: Irene Lai (IL) Interviewee: Scott Yu (SY) Date and time: 09:00 am, April 19th , 2022 Duration: 1 hour Platform: WeChat phone call Work background: Store design, and landscape design Current job: Landscape designer Year of industry experience: 3 years Location: Xiamen, China

IL: Hello Scott, thank you for joining me in this interview. Just a quick background of myself. I am Irene, a current MA student studying Luxury and Brand management at SCAD. I am doing my final project about the application of digital technologies on Visual Merchandising for CELINE in the Chinese market. I aim to do VM after graduation so that’s why I am doing related topic on this project. So let’s start our conversation! Would you want to share your experience of store design?

105

SY: Yes, of course. I had worked for a Chinese fashion brand SANKUANZ for 2 months, and in charge of store design from exterior to interior look, for both their pop-up store and a brick-and-mortar in Shanghai. When I worked in SANKUANZ, it was Shanghai K11 Concepts (the first art shopping mall in China) that invited the brand to do a pop-up store in the hallway in the mall. At that time, because it was a time-limited space, so we use the materials that could be easily set up and torn down, but at the end it was because the budget problem, we did not finish the space. After SANKUANZ, I came back to Xiamen and had worked in Red Dot Design Museum Of Xiamen, doing the visual space design for the exhibitions. I am now still in Xiamen, working as a landscape designer.

IL: Got it. So about the budget, who are the main role in charge of that?

SY: It’s the brand SANKUANZ themselves taking charge of the budget, but at the time building the pop-up space in the shopping mall, the brand was collaborating with an interior design company, so the budget was managed by both sides.

IL: So when you worked for SANKUANZ for that pop-up space, does it mean that there was still a part in interior design that should be finished by another team?

106

SY: Right. At that time, the floor design and materials sourcing were not our tasks based on our expertise. So that’s why we should team up with other team to make the whole space completed. We were mainly in charge of visual space design for a store. And it’s because my background is more on the site of landscape, we still need professional team to help with those interior details.

IL: What attracts you the most in the arena of store design and landscape design?

SY: From the sketch to the final draft, I enjoy the whole design process especially seeing the final result, it brings me a great sense of achievement. Besides, I enjoy designing the in-store layout and the footfall because it helps me understand consumer behavior when they are shopping and cultivates my logic to learn more about the relationship between visual space design and consumer mindset.

IL: What are the main trends in store design and visual merchandising in China?

SY: I would say the application of digital technologies on visual displays and in-store experience are popular, especially among the younger generation. For example,

107

Gentle Monster had a pop-up space in Beijing that installed a giant face robot, attracting lots of consumers stepping in-store. I thought this kind of installation creates more fun and interactions with target consumers are the highlights. In terms of visual displays, lighting is much more playful than before too. The changeable of the beams exuding ambient moods depends on themes. The goal is to catch consumers’ eye, inviting them to know the brand, and cause the sensation in the markets.

IL: Do you have any thought on CELINE’s new store design, or in-store visual displays?

SY: In general, it seems more like a gallery than the old CELINE’s space. I feel like it’s more artistic, like visiting a museum. Basically, the new CELINE store design still remains its brand DNA, clean and comfy tone. But because the brand has collaborating with artists in the new store design, it incorporates more creative elements inside, and I feel like it’s great, more vivid from the customers’ perspective. On the other hand, I think this arty atmosphere is still old fashion. So I think implementing digital technologies in store or displays would be more playful for future consumers. If these interactive devices provide dynamic visual or other sensory effects, it would definitely increase shopping experiences. I have seen the application

108

of Augmented Reality on smartphones when I was shopping in Xiamen, and it impressed me because I could feel that the brand was engaging me deeply, making me know more about the brand via this kind of participation.

IL: If online platforms also utilize the same strategy on visual displays, what is the difference between? And how will you feel?

SY: I feel like online platforms would be more like a bonus for digital marketing, and have a synergy with VM in the physical spaces. For instance, Louis Vuitton has developed its games on its mobile app, and it could be a tool to attract consumers to visit a physical store having more fun. In terms of visual displays in luxury arena, customers still prefer visiting brick-and-mortar than purchasing online after long lockdown, because they still desire for the real touch and feel for products. They want to see products physically instead of simply viewing them online though the product presentations are basically the same, especially for garments and leather goods. The digital technologies used in online platforms are mainly for digital marketing promotions causing a buzz, or the auxiliary tools enticing consumers to go to a brickand-mortar. Consumers want to feel the quality of products in the surroundings exuding the exclusive aura, so the VM in brick-and-mortar, say store displays,

109

lighting, sound, scent, styling and ambience are significant and not easily been replaced in the physical spaces. Above all, the physical VM is not replaced by online displays or presentations, even the services of AR or VR at this point. There is still a huge difference between online VM and offline VM even incorporating digital technologies, but the brand message is the same.

IL: During the pandemic, what are the severe impacts to the luxury retail? Did it affect the expansion of offline luxury stores?

SY: Honestly, though the trends show that COVID19 harms physical retail stores tremendously in the global marketplaces, it did not stop the expansion of luxury retail in physical spaces, instead, luxury offline stores are still growing in China. It is true that E-commerce did grow in the Chinese luxury market due to the convenience and the social distance policy, but Chinese luxury consumers still tend to go shopping offline. From my observation, Chinese tend to shop in the physical luxury stores because of the purchasing habit. Put it more precisely, they want to reach luxury goods face-to-face with assistance from sales associates in store, from appreciating items, purchase, and after-sales services. They need the real people who are professional with products to address problems they might have.

110

IL: Wow, it’s interesting to know that! I would also like to know the dominant influence luxury E-commerce brings to the offline sales.

SY: For luxury goods, their online distributions in China are mainly on the platforms like Taobao and Tmall apart from official websites. And social media like WeChat and Weibo, are also becoming the online marketplaces for luxury too. But for meta luxury brands like Chanel and Hermes, they still insist in the rarity in channels, remaining a distance from the public. I would say, the key factors that E-commerce would influence offline sales in luxury world would be discount promotion, but just limited to fashion and mass market brands such as COACH.

IL: Amazing! Glad to know that. My last question is, based on what you have mentioned, as the application of digital technologies has embraced by the younger generation, from your perspective, what kinds of digital technologies are recommended to build in luxury store design and VM based on customers’ preference? And how will these installations in store design and VM affect the young customers’ purchase in China?

111

SY: For luxury brands, I think people desire virtual try-on for apparels and accessories the most when they are shopping in store. AR technology is popular for offering this kind of service and brings more fun. The younger generation in China is attracted by interactive gadgets and smart devices in the real places, so it is a critical point for luxury brands to impress potential customers at the first sight. In my opinion, VR technology compared to AR will be trickier because customers should put on the headset to experience. Considering the sanitary issue during COVID 19, or the convenience of put on and take off the headsets, customers would avoid this kind of touch to reduce infection. Undoubtedly, installation of interactive technologies might cause a sensation among customers and increase brand awareness, and seems like it might bring in sales increase, but truly I am not sure if it will prompt people to buy products simply via the incorporation of digital technologies on VM.

IL: Got it. Are there any other thought you want to share today?

SY: It is obvious that the mainstream for international luxury brands is going young because they aim at the future customers, the young generation Z in Chinese market. So, it is easy to tell that more and more brands are utilizing digital technologies on marketing, online and offline channels, as well as store design and VM. In general,

112

the strategies are centered around customers. On the contrary, the challenge would be the senior customer retention. The older loyal customers would not favor the latest design brands have altered to, or the latest technologies in store. Ultimately, it depends on how the brand wants to showcase its image to its customers, and what the brand wants to convey to them, and it will reflect on the marketing strategy, promotion, store design and the VM strategy definitely.

IL: Cool. It’s such an informative interview! I will record our conversation for my research, and this is the end of the interview. Thank you so much for your sharing and stay in touch if there is any further question.

Appendix D. Interview Transcripts 2 Interviewer: Irene Lai (IL) Interviewee: Beryl Jiang (BJ) Date and time: 10:00 pm, April 20th, 2022 Duration: 1.5 hour Platform: WeChat phone call Work background: Visual Merchandising (VM) and Stylist in the apparel industry, ex. FILA Current job: freelance Visual Merchandiser

113

Year of industry experience: 12 years Location: Fujian, China IL: Hello Beryl, thank you for coming to this interview. I am Irene, a current graduate student at Savannah College of Art and Design (SCAD) in USA. I am doing my final project related to the digital technologies and visual merchandising for CELINE in the Chinese market. I would like to get some insights into emerging trends of visual merchandising in luxury and fashion industries in mainland China. So how about telling me a little bit of yourself?

BJ: Yes of course. I am Beryl, a freelance visual merchandiser in China. I have my bachelor’s degree in Fashion Design and 12-year working experience of Visual Merchandising and styling for fashion and apparel brands including menswear, womenswear and childrenswear in China. Before my freelance career, the last brand I worked for was FILA, a sportswear brand.

IL: That’s fantastic! In terms of VM, do you think there is difference between different industries?

BJ: Basically, the general formula and guideline of VM is the same across all

114

industries. But usually, when we talk about VM, we associate it with fashion and apparel industries. As you know, the concept of VM is originated from fashion and apparel industries in history. However, in China, VM is already applied on wide range of industries, for instance, lifestyle, beverage and tea, food services, furniture … etc.

IL: Right. What are the cores of VM across industries?

BJ: Honestly, VM is a part of marketing strategy, using visual power of products, displays and other sensory impacts to capture customers’ attention. Above all, the main target is people, the customers. In terms of that, consumer behavior and mindset are the core for VM. To understand the target consumers is the first thing for a brand in this consumer-centric era. Besides, people’s visual attention only lasts 7 seconds at maximum. So, the first impression of the brand image, store design, and product presentation are critical factors in VM.

IL: Got it. Based on these VM rules, what are the trends happening now in China?

BJ: Under the big picture that the business model is changing in China, the trends in VM are centered around consuming style of customers and the visual sensory of gen

115

Z. The future trends of VM in China is moving forward to traditional related and memories of Chinese culture, such as the development of Chinese characters, Chinese drama, and localization.

IL: What are key events of VM that is happening in luxury retail? What do you think?

BJ: Luxury brands have been inserting some Chinese traditional elements during holiday seasons or festivals for years, like using the zodiac signs in Chinese lunar year collections via creative ways. These are the common marketing tactics international luxury brands use in order to cater to Chinese customers. However, from my perspective, this kind of manipulation is still lacking inheritance. I feel like those luxury brands are just focus on the surface of the whole Chinese culture, but there’s more and more subcultures and local heritages to explore. Now Chinese customers are fond of old Chinese elements applying on every aspect of life and society, so it would be beneficial for luxury brands to dig more into the roots and inject local spirits onto product design, product presentation, store displays, and so on. Consumers will favor in this direction.

IL: In terms of localization, how do you think luxury brands can apply it on VM to

116

engage customers in China?

BJ: Given that China is huge, from the North to the South, from the West to the East, different region has each unique culture and custom, so if luxury brands can incorporate more local elements on store design or VM, it would definitely resonate local people’s emotions and create a sense of agreement. Of course, the basic tactics of VM remain the same, such like lighting, color scheme, styling, fixtures, footfall, layout, etc. I also tell that the Chinese customers are now gravitating toward interactive and immersive experience in store. Especially for the young people, they tend to engage with brands via digital technologies and expect brands can explore more on this side. Apparently, this is an ongoing trend on VM too.

IL: Awesome. When talking about applying digital technologies on VM, how to incorporate it into the VM guide (VMG) of luxury brands, and how does the guide look like, to your knowledge?

BJ: It will depend on product allocation from the sourcing stage. Generally speaking, the function of VM in luxury brands is that the headquarters assigns VM team to every market in different regions or nations, and then the buyers select, and purchase

117

products based on the knowledge of local culture and market style. For instance, collections imported to Beijing and Yunnan are definitely in different bulks and sizes, and these allocations will directly affect the visual displays and presentation at the retail store. Besides, each store has different space with various height and width, which will also cause differentiation among fixtures, fittings, props and styling on VM. Generally, the basic guidelines are product, sales and visualization. These three elements are key in VMG.

IL: How about the VMG in CELINE’s new retail strategy? Do you have any thoughts on applying digital technologies on VM for the brand? Or is there any other suggestion for the brand to increase immersive experience at the new designed brickand-mortar?

BJ: First of all, VM should reflect and present the brand image and heritages at the physical sites. CELINE is apparently going young under Slimane’s leadership, so the new renovated spaces also reflect the spirit of new CELINE, much more modern than before, and artistic at the same time. So, the basic of VMG is in the same tone with new CELINE and new director. Art pieces and furniture in spaces are in line with Slimane’s aesthetics. Then, the space and location should be taken into consideration

118

when evaluating the feasibility of digital technologies. For instance, the flagships store in Chengdu is large enough to accommodate more art pieces, and they even have an instagrammable floor for photoshoot! This store has enough spaces and customer base to develop digital technologies such as AR and VR. For the store in Yunnan, it is newly opening and still in small scale with small customer base, so at this point it might not be an appropriate timing to implement digital technologies from the ROI aspect.

IL: I see. What kinds of digital technologies have been widely used in luxury retail in China so far? And what are Chinese customers’ reaction?

BJ: When talking about digital technologies such like AR, VR, and hologram, these are normally categorized into the visual sensory experience in VM. Other technologies on VM such as Artificial Intelligence (AI) has been widely used in store too. So far, AI had been used on inventory tracking, digital board for try-on, information of products, selecting items to payment and after sales services. This technology on VM is like an assistant along the customer journey, from the front end to the back end, providing customers with interactive and convenient experience. Customers nowadays expect more playful experiences in the offline stores,

119

undoubtfully, digital technology is a great communication tool on VM. Finally, human interaction is also a key trend in VM in brick-and-mortar sector. Interactive shopping experience in the physical stores cannot be replaced by the online platforms completely because human beings need real socialization and real touch with each other after all. This phenomenon becomes obvious after the long lockdown.

IL: Terrific! I am so glad to know more from your perspectives! Is there anything I did not mention but is important about VM?

BJ: VM should always be aligning with brand DNA and brand codes. When thinking about the application of digital technologies, we should consider if this kind of digitalization would fit the brand image or not. Technologies can be used widely within an entity, but brand identity is the core to follow. Based on the brand identity to decide which digital technologies is the most appropriate. According to my understanding, the budget for hologram is expensive than AR and VR. Some product hologram devices are cheap, but the quality is really bad. AR is considered the most popular among the young customers and have been applied by fashion brands widely in China.

120

IL: Thank you. This is the end of the interview. I really appreciate your responses and I will document them for my further research. Hope you enjoy the rest of the day!

Appendix E. Interview Transcripts 3

Interviewer: Irene Lai (IL) Interviewee: Efsun Yilmaz (EY) Date and time: 10:00 am, April 22th, 2022 Duration: 1 hour Platform: WhatsApp phone call Work background: Digital Merchandising at Scotch & Soda, Visual Merchandising at PUMA, Site Merchandising at Calvin Klein, Merchandising Operations Coordinator at NIKE Current job: Merchandising Operations Coordinator at NIKE Year of industry experience: 7 years Location: Amsterdam, Europe

IL: Hello! Efsun, how are you? Is everything going well in Europe?

EY: Hi Irene, I am good! How are you?

121

IL: I am good too! I am so glad to have you here, sharing your working experience of digital merchandising for fashion retail, sportswear, and luxury brand with me! Also, in this interview we will talk about trends in digital merchandising in the luxury markets, and if you have some ideas about visual merchandising, welcome to share! Let’s get started with your professional background.

EY: Yes, sure. So, I am Efsun Yilmaz, now is the merchandising operations coordinator at the sportswear brand NIKE in Amsterdam. I have my experience mainly in digital merchandising at a Dutch fashion brand Scotch & Soda and American luxury brand Calvin Klein. In terms of Visual Merchandising, I only have a short Visual Merchandising intern experience at sports brand PUMA.

IL: What is the difference between digital merchandising and visual merchandising? Does digital merchandising mean by doing visual displays or product presentations online, on the company’s website?

EY: Yes, that is a part of the tasks in digital merchandising. But there are more aspects we need to run. Let me explain it in detail. You have mentioned the visual presentation on websites, and that’s true. We have to design the product listing pages,

122

trying to make them more visible on our sites, most importantly, to keep everything in line with the brand. This part is similar to VM in the physical spaces from the visual standpoint, but digital merchandising we also heavily use tools, like I had used Fredhopper for Calvin Klein (CK) to track performances on websites. Different companies have different kinds of tools based on budget. Scotch & soda uses Salesforce and PUMA uses PIM etc. But the logic behind is quite similar. When I am doing visual merchandising, I usually collaborate with CRM team, to run campaigns smoothly.

IL: I see. Sounds like basically there is overlapped areas between digital merchandising and VM. When you are working for these brands, are there a VM guide to follow? your knowledge, what are the emerging trends in these two areas?

EY: When I was doing VM, there is a brochure including VM part for the whole team. I remember that color scheme is always a key to consider. It should be in line with the brand image and messages, and that’s why big companies usually develop their own VM guidelines with colorway, style, main elements reflecting the brand’s personalities. Across all sites, online and offline, the ambience should all be consistent with each other. The emerging trends I would say, some brands in luxury and fashion

123

have developed its figures for gaming or visual displays in both online and in retail sectors. What I see, there are self-checkout services in retail area but I am not sure what kind of technology is that, haha.

IL: Okay. And what else? Have you seen any luxury or fashion brand that has implemented digital technologies and is an ongoing trend?

EY: Hmm… yes, I have seen Louis Vuitton using a really amazing artificial board just at the door when I was in Istanbul airport. Also, Dior does that too! The panel creates immersive visual effects and I stood in the front of them feeling amazed.

IL: That’s fantastic! Just like the dynamic effects for visual feast! Do you think it’s a key trend to attract customers in global retail spaces? Like you are in Europe, are European consumers also into it from your observations?

EY: Definitely! I know some in-store displays there have been used digital boards applying AR and VR things and it will attract customers for sure! Besides, when I am travelling around Europe, I visit museum a lot. Technologies such as hologram and artificial intelligence are widely used on presentations too!

124

IL: Glad to know that! I have my last question, which is, what are the main customer demands for NIKE now? No limited to VM or digital merchandising.

EY: It depends. To my knowledge, customers’ appeal for products that incorporate both functionality and outlook, and on VM in the retail, they are attracted by the convenience brought by AI technologies. It also facilitates the purchase and checking process.

IL: Thank you! Is there any thought you want to share, or I didn’t thing about?

EY: Anytime! I don’t have any other thought at this time, but maybe in future when something comes up my mind, I will tell you!

IL: Awesome! Really appreciate all things you share with me! That’s all for today! Enjoy the rest of your day and talk to you later!

Appendix F. Interview Transcripts 4

Interviewer: Irene Lai (IL) Interviewee: CELINE staff – Chloe Hu (CH) & Andy Xie (AX)

125

Date and time: 09:00 am, April 23th, 2022 Duration: 1.5 hour Platform: ZOOM meeting Work background: Store intern & staff at CELINE China Current job: Graduate student at NEOMA business school, France (CH); Marketing and communication intern (AX) Year of industry experience: 2 years Location: France; Guangzhou, China

IL: Hi Chloe and Andy! Thank you for accepting this interview with me. I am excited to hear your thoughts today.

AX: Of course, we are willing to help! Chloe and I have talked with each other before about our experience at CELINE and found many similar things between CELINE Guangzhou and CELINE Kunming, haha!

IL: Awesome! Then let’s start with your experience working in CELINE. What motivates you to work in CELINE? Have you bumped into any challenges in store?

126

AX: I can share first. I worked for CELINE in Guangzhou city, both old CELINE store and new CELINE store. I was motivated by old CELINE style, Philo’s femininity, minimalism, and clean look, and I was still working there in new CELINE era. I feel like the new style looks similar to SAINT LAURENT, the brand Hedi had worked before, haha. And across from our boutique is SAINT LAURENT, so some of customers are confused sometimes. The challenge for CELINE in Guangzhou is the in-store space. CELINE is one of the stores in a mall, but compared to the population in Guangzhou, CELINE needs more spaces for the crowd.

CH: I worked in CELINE Kunming city, a two-tier city in China. It was special because Kunming is not as popular as the first-tier cities like Beijing, Shanghai and Chengdu, so people in Kunming has not been quite familiar with CELINE, even they may be confused between CHANEL and CELINE. The store was opening in Kunming in 2020, which was a later time for the local people to know the brand. The brand awareness has not been widely recognized yet. However, those who know CELINE are excited for visiting the brick-and-mortar. I remember when the store opened in the first three days, our sales volume had already achieved the month target of 2 million RMB dollars.

127

IL: Talk about your tasks for Visual Merchandising at store.

CH: I was following the store manager’s guidance to do VM including in-store and window displays, and product allocation. But it was not the main job for store sales associates and intern. The headquarters will assign a VM team to China and they will visit each store regularly, each two or three months, to change or adjust in-store, window, product displays based on the VM guide. But lighting, music, and ambience are basically the same. Each store in China plays the background music selected by Hedi Slimane and you can also smell fragrance of CELINE’s perfume in store. Besides, we have maintenance staff in local area, taking charge of space maintenance. The challenge is that sometimes the VM guide doesn’t cater to local need. And it causes lacking in products or less attraction on visual displays to local people.

AX: CELINE in Guangzhou city is small, so basically, we don’t have to do Visual Merchandising. Like Chloe said, headquarter will assign VM team to the store each two or three months. From my observation, the store layout, footfall, and focal point are basically the same, only the product presentation will change due to new arrival of products and seasoning theme. Lighting, ambience, background music and scent in store are as same as other CELINE stores. We will only assist VM team to move star

128

products at the focal point and a little bit of in-store displays.

IL: From your observations, what are key factors that affect customers to visit a brickand-mortar and step into the store of CELINE?

CH: Mainly is because of star products. Store visual aesthetics is significant too.

AX: Yes, I agree. So, the focal point is really important for star products to attract customers, and I think CELINE is doing well in this part.

IL: How do you think about new CELINE in China under the leadership of Hedi Slimane? Do you have any thought on new CELINE store?

AX: New CELINE is more popular among the young customers because of LISA’s endorsement and much more accessible pricing strategy. Thus, the brand awareness increases for sure compared to old CELINE that is only familiar with a certain target group. The new CELINE space is larger and more accessible. People feel more comfortable while shopping inside and appreciate product presentation. But Hedi’s style somehow lose traditional customer base who are fond of Phoebe Philo.

129

IL: How do you think about the strategy of incorporating digital technologies on VM in store? Will it cause sensation and help the brand awareness at the retail sector? Or what kinds of benefit will it bring to staff at store?

CH: I personally think AR will help address the customer problems due to out-ofstock situation. Because people visit a retail store usually because they want to see products and try. If we lack some collections in store, customers will feel unsatisfied, causing unpleasant shopping experience. If there were an AR mirror or artificial board set in store, it would benefit customers’ visual feast even though the products were not available at store, and it would to some degree mitigate our pressure to allocate products from other stores and factories. But I don’t think every store can do this technology due to high costs. I suggest the brand start from the most iconic store to test the water, and develop it store by store after evaluation.

IL: From your understanding of the target consumers, if CELINE is going to use digital technologies on VM, what will it affect customers’ recognition of the brand and what other influences will be?

130

CH: VM definitely has a great power to introduce the brand image and identity. CELINE has done a great job on the visual aesthetics in line with its brand DNA. However, I found in Kunming, due to the product allocation, some collections are not available so we will lose some potential customers if they didn’t see their targets on shelves. But sometimes, the products are not out-of-stock, instead, we have stocks in our warehouse but because of VM instructions, a part of them are not showcased on shelves, and customers may have no idea about those products and leave the store, Maybe the incorporation of digital technologies will help this situation by showing all available stocks on the digital board, letting customers know more information and details.

IL: Good to know that. Is there any other thought on today’s topic you would like to share?

AX: Though the innovation of digital technologies might bring more fun to the young customers, we still need to take care of those traditional customer retention. So sales associates are important roles to educate customers with those technologies in stores.

CH: E-commerce is getting popular in the luxury market. Developing the VM strategy

131

in the retail space should also consider about marketing strategy from online to offline in omnichannel era. Brand image and messages should all on the same pages for sure. If this incorporation of digital technologies on VM would be carried out, the online sites could serve as the promotion area to help the strategy.

IL: Thank you. I really benefit a lot from both of your insights. This is the end of the interview. Enjoy your weekend!

Appendix G. Interview Transcripts 5 Interviewer: Irene Lai (IL) Interviewee: Jackie Wu (JW) Date and time: 10:00 am, April 24th, 2022 Duration: 30 minutes Platform: LINE phone call Work background: DIOR marketing director, DIOR Deputy GM, Country GM of LVMH Perfumes & Cosmetics Taiwan Current job: Country General Manager of DIOR at LVMH Perfumes & Cosmetics Taiwan Branch Year of industry experience: 14 years Location: Taiwan

132

IL: Hello Jackie, thank you for accepting this interview with me. It will take around 30 minutes. I am looking forward to our conversation!

JW: Sure. We can dive right into the topic now.

IL: Okay. You are now working at LVMH perfumes and cosmetics in Taiwan, right?

JW: Yes. I was working at DIOR marketing team and now I am the country general manager at LVMH perfumes and cosmetics division in Taiwan branch, so I am not sure if I can provide enough information of CELINE and Visual Merchandising (VM) to you. I will try my best to answer your questions.

IL: I really appreciate it. My first question is, could you share any general VM guideline in LVMH group if possible? Is there any key factor when the brand is setting its VM guide?

JW: Of course. First, different brands have different VM guidelines based on their DNA, so the directions and focusing points are all different. But basically, there is a

133

general standard for the whole group in terms of quality and the ambience with upscale level. I am mainly in charge of cosmetics section, and the VM we will follow a guidebook that the headquarters sends to us, and it will change periodically.

IL: Got it. What is the current situation of retail store expansion of LVMH in the East Asia market, say China, Taiwan, Hon Kong, and Macau? JW: China now is the largest market and the most important distributor for LVMH, especially during the pandemic. We can see there are lots of Chinese elements in product design in holiday seasons, as well as in-store displays, window displays and VM. LVMH are willing to invest in these areas to consolidate the market size. But in terms of retail expansion, the group tends to be more cautious during the COVID19, instead, E-Commerce is another highlight to expand as the same time.

IL: How does LVMH perceive the trend of digitalization, in terms of marketing, retail, visual merchandising, etc.?

JW: This trend is inevitable for the entire industry. Digitalization has already been applied to VM, communication, brand awareness, outreach of customers, and so on, among luxury brands. Technology is innovative day by day, so we need to evolve with

134

the digital trend, keep abreast of it, and evaluate ROI as fast as we can. Now we are not just talking about digitalization, but omnichannel which combine both online and offline platforms to provide a seamless experience for customers. In fact, it grows fast in sales volume and popularity. In the nearly future, VM is not only offering only visual impacts to customers in the brick-and-mortar, but also extending to creating other in-store experience or working with other sectors in retail. We have been trying these applications at physical sites and I believe in the future, there will be more.

IL: Could you share VM guide of the brands you are working for?

JW: I am working in the perfumes and cosmetics division of five brands, DIOR, GIVENCHY, GUERLAIN, MAKE UP FOR EVER, and Benefit. Our guideline for VM is clear and set up by the headquarters, including the core principle, visual impacts, moods, and messages depends on brands and regions each two months. Beyond that, each brand might incorporate local elements into displays and store design according to local demands. But these additional concepts need approval from the mother company before launching. Generally, the function of VM guide in each brand is similar with a clear guideline and calendar.

135

IL: If I were a member in VM team in CELINE, I would like to propose and execute a VM strategy incorporating the digital technologies in China, do you have any suggestion for it?

JW: First of all, you need to know the brand really well, that means, the brand DNA, business culture, heritage, and messages. Preserving key elements of the brand on VM and keeping it consistent with the brand vision are always important to keep in mind. Undoubtedly, even incorporating digital technologies on VM, the brand image or key signatures should be presented to target consumers. Besides, if CELINE’s positioning is going younger, you can put some elements that resonate with the young generation, and combine them with the brand, to make the visual presentation look younger. Besides, LVMH is focusing on sustainable materials, like eco-friendly and CO2 reduced materials, and we have used it on store installations and VM. It is a good point for you to tap on.

IL: Has DIOR cosmetics utilized digital technologies like AR, VR, or hologram in Taiwan?

JW: Yes, we have built AR technology for virtual try-on both online and offline, and it

136

is a popular trend in beauty and cosmetics industries now. Generally speaking, I feel like this is an interesting experience, and it is advisable to consider the brand vision first. I am not sure if CELINE will do the same strategy but creating a unique shopping experience is always the goal luxury brands are doing. Above all, I suggest thinking about the brand vision and direction first before building the appropriate strategy.

IL: Got it. Thank you for sharing these insights with me. This is the end of the interview. Do you have any thoughts about today’s discussion?

JW: No problem. If you have any questions about CELINE, I can forward them to my colleagues if you need. And good luck on your final project!

IL: Thank you! I really appreciate that! Enjoy the rest of your day!

Appendix H. Interview Transcripts 6 Interviewer: Irene Lai (IL) Interviewee: Liz Jiang (LJ), Vanney Heng (VH), Xiao Tan (XT) Date and time: 10:00 pm, April 21th, 2022

137

Duration: 1hour Platform: WeChat group call Age: 31 (LJ), 25 (VH), 22 (XT) Educational background: Master’s degree in Luxury and Fashion Management (LJ & VH); Bachelor’s degree in Fashion Marketing (XT) Year of luxury consumption: 5 + years Location: China

IL: Hello Liz, Vanney and Xiao! Thank you all for joining me today. I am looking forward to our conversation!

LJ: Sure! I will try my best to provide you with information you need!

VH: If my words can help you, I’d love to share anything I know about CELINE!

XT: Of course! I am willing to help!

IL: Let’s talk about your perspectives of old CELINE and new CELINE. Any thoughts?

138

LJ: I feel like new CELINE had clear target positioning at mature women, and new CELINE is going younger. Besides, I like new CELINE store more than old CELINE. The space is larger and it makes me feel comfy while shopping in store.

XT: I did not notice old CELINE too much but new CELINE is impressing me because of LISA. After her endorsement, I start to follow CELINE’s social media account. I found the brand’s new image, colorway, and messages across all sites are consistent, even promotions are clearly delivering the brand’s style. I personally love the clean look on social media platforms, so new CELINE really wonders me at the first sight. In terms of products, I especially love the canvas design on products because it is the brand iconic signature that can be easily recognized.

VH: Old CELNE exudes a sense of indifference, not easily to approach. Besides, old CELINE has a clear positioning for mature women aged 30 or above, as Liz said. Bearing this recognition in mind, I would not walk into CELINE’s store in the past because that was not for me.

IL: What is the current status of CELINE in China? Is it still popular among young

139

customers?

XT: New CELINE is continuing creating a buzz in China, especially among the younger generations like me and my friends. This brand is moving forward to young customer based obviously. I notice that many people carry CELINE tote bags on the street, and the signature is becoming more recognizable. The triomphe sign.

LJ: I heard CELINE is adjusting its pricing strategy. I can tell that this strategy is not wise because the brand is just embraced by the younger customers, but the brand awareness is not as famous as Chanel or Louis Vuitton. Its luxury level is still in the tier lower than Hermes, Chanel, and Louis Vuitton. Besides, CELINE is targeting younger customers who might not be affordable for premium prices like what Chanel has set year by year. Thus, it causes a rebounded voice from customers currently.

IL: What is your shopping experience in a new CELINE store? What’s the difference from old CELINE? What attracts you to step inside the store?

LJ: I was researching my target products first online, and then decided to visit a retail store to take a closer look and a real touch for the items. I would say, I am the kind of

140

person who purchases in purpose. When I arrived at the retail store, the first thing caught my attention was the product in the focal point area. After stepping into the store, I found the layout was clearly segmented and the space was more like a gallery. I love the newly designed space with artistic aura. And the product displays gave me a sense of accessibility. It made me feel comfy shopping inside.

XT: I have the same thought. Old CELINE gave me a cold style and not easily to access. On the contrary, new CELINE store is contemporary blended with dark rock style. It becomes more vivid, easily to reach, not only the brand identity but also products.

VH: I am impressed by new CELINE store because it is like walking into a museum! It makes me feel comfortable staying inside and less pressure comparing to shopping in other luxury brand stores, because I could focus on the immersive environment instead of purchase-oriented mindset. It is a little bit old fashion, so I think adding some playful elements inside could attract younger customers’ attention more, such as interactive devices and a space for instagrammable moment.

IL: What impresses you the most on CELINE’s VM? Like store design, lighting,

141

fittings, in-store displays… etc. And what kinds of elements do you recommend the brand to insert on VM in the brick-and-mortar?

XT: I love new CELINE store because it uses more glasses for the store decoration, creating bright and transparent spaces which I am really fond of. And I like the consistency of clean-cut look of both old and new CELINE. Hedi still remains the spirit of minimalism which has been recognized as one of the brand’s DNA. Really good!

LJ: I like new CELINE because of larger spaces inside, and the wall design is doing well than before. I am especially satisfied with the product presentation. It is easily to reach and take a closer look. They did a great job

VH: As I have said, creating interactive experience would be much fun while shopping. I recommend CELINE use AR technologies to offer virtual try-on services in store. So that I can try on apparels virtually that I cannot reach from online sites. Besides, the footfall can be adjusted to be clearer because it would help me appreciate collections from section to section, to have a clear road map shopping in store. I think CELINE can put its signature, the triomphe logo on VM, to strengthen the brand

142

recognition.

IL: If CELINE intends to use digital technologies, AR, VR, or hologram on VM, which one would attract you the most, to stay in store longer and why?

LJ: I prefer AR technologies. I am interested in the virtual try-on mirror that enables customers to try on apparels that are not easily access, or maybe our-of-stock at the time I visit the store. If the store offered this service, it would definitely satisfy my desire of trying clothes efficiently. Besides, I like the big screen playing video of brand history or product details. This kind of dynamic presentation on VM is powerful for me to know more about the brand heritage and culture and trigger me to try the products. I think storytelling skill is important for brand to engage its customers.

XT: I love VR technologies. I have experienced VR in other brands, not luxury brands, in a mall. I felt amazed after putting on the headset and saw a totally different world. The only concern is that the putting on the headset is a little bit troublesome. During the pandemic, the sanitary issue is another concern deterring people from trying. Hologram is also attracting, but I feel like this kind of technology may be more

143

appropriate in exhibition like Van Gogh experience.

VH: In my opinion, if CELINE is going to utilize digital technologies on VM in brick-and-mortar, it would definitely be amazing and attract more potential customers since the young generation appeal for interactive engagement at retail stores. It is the dominant trend. I think CELINE can start this strategy from pop-up store or the iconic flagships stores, like Beijing or Shanghai, to test the water first. Besides, the VM strategy should cooperate with marketing strategy from online to offline. For instance, using the digital platforms for promotion and create a buzz, causing customers’ interest and leading them to visit the offline sites. After attracting them to the physical spaces, CELINE can create an immersive area, or Instagram photo booth that KOC and customers can take pictures and upload to their social media platforms.

IL: Amazing! I benefit a lot from your suggestions and thoughts, which give me some new ideas and directions for moving on the project. Do you have other thoughts to share?

LJ: I really agree with Vanney’s thought that this implementation can start from a few signature stores and see the customers’ reaction. And I also feel like the new CELINE

144

has more flexibilities to do technologies thing thanks to its larger space, and the modern design that is associated with innovation. CELINE is shifting to younger, more energetic as well as trendy style while still remaining the brand’s classy imagery.

IL: I appreciate your sharing today! This is the end of the interview, and the conversation will be documented for the academic research.