Burberry Group PLC is teaming up with Chinese Internet giant Tencent Holdings Ltd (騰訊) to experiment with blending retail and social media in the key luxury market.
The move came as Burberry reported six-month earnings that beat estimates, helped by demand for designer Riccardo Tisci’s new look for the brand. The shares rose as much as 9 percent yesterday in London, the most since July.
The first step is for Burberry to open a store in Shenzhen, China, powered by technology from Tencent, which operates the social network WeChat (微信) as well as payment and gaming apps.
The space is to offer “unique experiences that connect luxury customers’ social and online lives to their physical environments,” the UK luxury-goods maker said.
“Social media is becoming such an important part of the luxury customer journey, particularly in the inspiration phase,” Burberry chief executive officer Marco Gobbetti said in a statement. “Retail needs to keep pace with this.”
Consumers who are determined to keep up with online influencers are driving growth in makeup, fashion, fine dining and travel.
With popular social networks such as Facebook Inc’s platforms banned in China, a deal with Tencent can help bolster the brand’s visibility in that market.
The move comes as luxury brands are taking a hit in sales from the continuing anti-Beijing protests in Hong Kong.
Sales declined by a double-digit percentage in the territory in the latest period, Burberry said.
Elsewhere, the firm did better, and adjusted operating profit rose to ￡203 million (US$260.69 million) in the six months through September.
Retail sales rose 4 percent on a comparable basis, matching estimates.
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