After China, Zara Expands Live Shopping Experiment to Europe, US

Shoppers walk past a Zara clothes store, part of the Spanish group Inditex, in Las Palmas de Gran Canaria, Spain, December 13, 2022. (Reuters)
Shoppers walk past a Zara clothes store, part of the Spanish group Inditex, in Las Palmas de Gran Canaria, Spain, December 13, 2022. (Reuters)
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After China, Zara Expands Live Shopping Experiment to Europe, US

Shoppers walk past a Zara clothes store, part of the Spanish group Inditex, in Las Palmas de Gran Canaria, Spain, December 13, 2022. (Reuters)
Shoppers walk past a Zara clothes store, part of the Spanish group Inditex, in Las Palmas de Gran Canaria, Spain, December 13, 2022. (Reuters)

Zara will expand its live shopping broadcasts to the UK, Europe and the United States this year, testing a format that is already wildly popular in China but one with which Western shoppers are less familiar.

The fast-fashion brand, whose parent Inditex reports quarterly results on Wednesday, is investing in new ways to engage shoppers as analysts expect sales to grow less strongly after an extraordinary post-pandemic surge.

Five-hour long live shopping shows in China, broadcast weekly on Douyin, TikTok's Chinese sister site, have helped boost Zara's sales since they launched in November, according to retail analytics firm EDITED, Reuters reported.

"We want to take this to the Western countries, where livestream is not as popular...but we think why not – from an entertainment perspective this is like an evolution," said a Zara spokesperson for the initiative, which is expected to launch between August and October.

Shopping as entertainment isn't new - TV shopping channels where viewers phoned in to buy featured products were popular for decades - but social media and ecommerce have triggered a new era of livestreaming, led by China where influencers sell everything from cosmetics to snacks at a frenetic pace.

Brands looking to create a more rarified experience have sought to do live shopping differently.

Zara's show on Douyin features Chinese models wearing Zara dresses, trying on shoes and jewellery. It also includes catwalk sequences and "backstage" make-up shots, while its conversational, leisurely style is in contrast to the hard-sell livestreams that hosts like "Lipstick King" Li Jiaqi are famous for.

A team of 70 people works on the live show, which is streamed from a 1,000-square metre space in Shanghai, switching angles between seven cameras, Zara said. On average, it attracts around 800,000 unique viewers per show.

"Zara's livestream approach built significant brand awareness in China," EDITED analyst Krista Corrigan said.

Zara sold out of most sizes in 50% more products in China in the first three months of this year than in the same period of 2023, according to EDITED data.

The livestream also allows Zara to reach shoppers even as its physical presence in China has shrunk from 570 stores in 2019 to just 192 as of Jan. 31 this year.



LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
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LVMH Shares Drop after Missing Second-quarter Estimates

A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights
A man walks past a shop of fashion house Dior in Paris, France, April 15, 2024. REUTERS/Manon Cruz/File Photo Purchase Licensing Rights

Shares in LVMH (LVMH.PA) fell as much as 6.5% in early Wednesday trade and were on track for their biggest one-day drop since October 2023 after second-quarter sales growth at the French luxury goods giant missed analysts' consensus estimate.

The world's biggest luxury group said late Tuesday its quarterly sales rose 1% year on year to 20.98 billion euros ($22.76 billion), undershooting the 21.6 billion expected on average by analysts polled by LSEG.

At 1000 GMT, LVMH's shares were down 4.5%.

The earnings miss weighed on other luxury stocks, with Hermes (HRMS.PA), down around 2% and Kering (PRTP.PA), off 3%.

Kering is scheduled to report second-quarter sales after the market close and Hermes reports on Thursday, Reuters reported.

Jittery investors are looking for evidence that the industry will pick up from a recent slowdown, as inflation-hit shoppers hold off from splashing out on designer fashion.

JPMorgan analyst Chiara Battistini cut full year profit forecasts by 2-3% for the group, citing softer trends at LVMH's fashion and leather goods division, home to Louis Vuitton and Dior.

"The soft print is likely to add to ongoing investors’ concerns on the sector more broadly in our view, confirming that even best-in-class players like LVMH cannot be immune from the challenging backdrop," said Battistini in a note to clients.

The weakness of the yen, which has prompted a flood of Chinese shoppers to Japan seeking bargains on luxury goods, added pressure to margins, another source of concern.

Equita cut 2024 sales estimates for LVMH by 3% - attributing 1% to currency fluctuations - and lowered its second half organic sales estimate to 7% growth from 10% growth previously.

The lack of visibility for the second half beyond the easing of comparative figures - as the Chinese post-pandemic lockdown bounce tapered off a year ago - is unlikely to improve investor sentiment to the luxury sector, Citi analyst Thomas Chauvet said in an email to clients.

"No miracle with the luxury bellwether; sector likely to remain out of favour," he wrote.

Jefferies analysts said the miss came as investors eye Chinese shoppers for their potential to "resume their pre-COVID role as the locomotive of industry growth and debate when Western consumers will have fully digested their COVID overspend".

LVMH shares have been volatile since the luxury slowdown emerged, and are down about 20% over the past year, with middle-class shoppers in China, the world's No. 2 economy, a key focus as they rein in purchases at home amid a property slump and job insecurity.

LVMH offered some reassurance, with finance chief Jean-Jacques Guiony telling analysts during a call on Tuesday that Chinese customers were "holding up quite well," while business with US and European customers was "slightly better".