(Yicai Global) Feb. 20 -- Swiss watchmaker Tag Heuer, owned by LVMH Moet Hennessy Louis Vuitton SE [EPA:MC], will become the first luxury watch brand to open a flagship store on Alibaba Group Holding Ltd's [NYSE:BABA] online marketplace, Tmall, as it turns its eye towards a younger demographic.
Young people today are used to shopping online said Pan Jinji, general manager of Tag Heuer Greater China. "Our target groups are aged between 25 and 35," he said, adding that according to Tmall, more than 60 percent of its users were born in the 1990s.
The company has boosted business by increasing efforts in the Chinese market. Last year, it beat a poorly performing market to grow operating income by more than 10 percent, compared to negative growth of over 10 percent in 2014 and 2015. Conservative estimates show sales growth to be in the high-single digits in 2017, he said.
During this year's Chinese New Year holiday, Switzerland-based Tag launched a series of online-to-offline promotions with 10 of its products, he said. Customers paid online and were able to collect the product in store, however around half of the orders were cancelled when customers realized there were no stores in their city. The company will use the incident to guide future store openings in China, Pan added.
Tag Heuer previously had just a small share of the Chinese market, he continued. At first, the brand wanted to challenge the USD5,000 to USD10,000 price range, but decided to market to millennials, lowering prices to between USD1,5000 and USD3,000. This was when performance picked up.
Pan added that the firm was testing a smart watch specially developed for the Chinese market, which would be launched within the year.
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