The owner of fashion brands including Lanvin, Caruso, St. John Knits and Wolford, among others, was facing widespread production delays, order cancellations from multiple wholesalers, not to mention a general plunge in retail sales as mandatory stay-at-home orders were issued across numerous countries. When Cheng meets for this interview, she and her team are still unsure of how they will approach the likely prospect of canceled — or at least altered — fashion weeks in the fall.
“It’s a challenge honestly,” said Cheng, sitting in her office on a high floor of the Bund Finance Centre here.
But one major difference Cheng wields to her advantage is that she is a Chinese executive working for a Chinese group. The country was first hit in January by COVID-19 but four months later, the nation is largely recovered — and life looks remarkably a lot like it did pre-virus in Shanghai. Traffic jams have returned, and masks are no longer required by the government to be worn by people out and about. Shoppers are creeping back incrementally, she observed.
“My personal view is it’s not a ‘revenge [-spending],’” said Cheng, referring to the pent-up consumer demand some in the industry have predicted. “It’s people coming back to a normal life. People are very rational now. According to my review of traffic analysis of our stores after reopening, pickup is step by step. It’s not like reopen and 100 percent [of people] go back and ‘revenge spend’ all their money.”
The pandemic brought home one key point, though. “Because we’re hit by the virus and the world is full of uncertainty, you want to consume quality,” she said.
With nearly all their manufacturing paralyzed in Europe, Fosun Fashion Group has gotten creative to take advantage of China’s lead in recovery, as well as its strong online sales channels. Lanvin has begun livestreaming on Xiaohongshu, with great results, she said, and quickly pivoted some manufacturing to China to create a “Love In Action” capsule themed after Babar, the famed French kids cartoon elephant character.
The idea came from a series of Instagram posts the French-based Lanvin did back in March as the pandemic became full-blown in Europe. The brand illustrated Babar diligently staying at home doing various activities, including practicing yoga, having tea and dressing up.
“Those pictures were so touching and some of the fans and customers left messages saying, ‘hey I love these pictures.’ [So we thought,] OK, these are very emotional moments, we want people to feel the brand has warmth,” Cheng said.
Over the course of a nimble three months, the pictures became a 12-piece capsule collection — mainly of simple, comfortable items, including T-shirts, scarves, and hoodies, all fit for quarantine life. The capsule launched in China on May 20 — one of the days celebrated as Valentine’s Day in China — with plans to launch it in other markets as well.
“The design and creativity part is still from Paris, but we needed to find qualified producers in China,” said Cheng. Admittedly, the categories were simple garments and did not require the production of, say, an evening dress with complicated embroidery. That kind of labor would be difficult to find outside of Europe. But it does point to the kind of agility a post-COVID-19 world appears to demand from brands.
“We are rooted in China, so we’re facing the China market and consumers, which is a large proportion of luxury consumption,” she said. “Because China has advanced digital applications everywhere, which is very special…that really gives us the chance to say, how do we best use the digital tools to speed up the growth of the brands?”
The jewel in the Fosun portfolio is undoubtedly Lanvin — so much so that Cheng finds herself for the second time in the span of just a few years donning the role of interim chief executive officer. After Nicolas Druz was ousted in 2018, Cheng managed the brand, before bringing in Jean-Philippe Hecquet. Hecquet left in March after 18 months, handing the reins back to her.
At the end of last year, Lanvin was coming off a relatively high note. It just closed a large retrospective exhibition in Shanghai, and unveiled a new flagship. Cheng said she’s been very pleased with creative director Bruno Sialelli, a strong accessories department, and new marketing team in place.
“With the whole new marketing team we built up last year, we are now really taking the chance to speed up and transform ourselves.…Actually, we saw a really good trend of the revenue and marketing feedback but it has been impacted by the virus,” Cheng said. “Everybody has challenges this year but we also see these challenges as blended with opportunities.…We’re confident it will be a good year for us.”
She declined to share any financial details, but said she believes very much in the long-term potential of the French house to become a billion-dollar brand.
Cheng also has quite a to-do list when it comes to Wolford, which is celebrating its 70th anniversary. The company is planning an exhibition in China this fall. But, watchful of new opportunities, Cheng also shares that Wolford is to unveil an ath-leisure line, called W, in the second half.
“After the virus, people now really care about their health,” she said, adding that the Austrian “skin wear” brand’s long history of fabric technology made adding ath-leisure a logical step.
While ath-leisure seems to be a crowded and competitive space already, Cheng thinks the launch would fill a missing niche in the category.
“Honestly, [there are] not many competitors because we are creating something at the luxury level, but it’s an ath-leisure line you can wear to doing yoga practice, running, and at home.”
With the exception of Lanvin and Wolford, Cheng inherited the Fosun Fashion portfolio when she stepped into the role, which helps to explain why the other brands in the group seem to be a bit of a hodgepodge. But she said she likes having the brands in separate categories, which allows it to have more synergy than competition with each other.
“Caruso is luxury men’s suits; St. John Knits is luxury women’s knitwear; Lanvin is Parisian elegance covering 360-degree categories; Wolford is luxury skin wear; Tom Tailor is fast fashion, Zara-level but has 95 percent recognition in German-speaking areas. This is lower-level than the other brands but they don’t fight with each other,” she said.
Asked whether the pressure from COVID-19 had put any companies she would be interested in on the market, Cheng said there may be more opportunities in general, but good brands are still quite elusive to find.
For the moment, especially given the upheaval caused by COVID-19, acquisitions along the supply chain are more her priority.
“We’re now talking about our overall strategy for Fosun is C2M — from customer to manufacturer — if there’s a good chance for vertical acquisitions, we’ll look at that,” she said.
Ultimately, she explains that the group is “very open, we won’t limit the scope. We won’t say we only focus on women’s wear, or men’s wear, or very high luxury.”
It’s mainly about the branding power, and if it has great potential — that’s the key, she said.