LVMH and Alibaba partner for tech-driven luxury in China while Chanel profits soar

24 May 2024 --- LVMH Group and Alibaba Group extend their partnership to expand the “luxury experience” in China, while Chanel defies a slowdown in luxury with soaring annual sales. 

Chanel’s Fragrance & Beauty category grew across all categories, especially Makeup, thanks to the return of travel retail and sustained growth from local customers. Last year, the luxury French brand released the “first ever” lipstick in a glass case, 31 Le Rogue, retailing for €165 (US$179.04). 

Its annual sales for 2023 rose 16% to US$19.7 billion, with operating profit climbing 10.9% to US$6.407 million and EBITDA up 9.4% to $6.89 million.

Leena Nair, Chanel’s Global CEO, says, “The strong results… underline sustained investment in building the desirability of our brand, creating the ultimate luxury experience for our clients and supporting our people to grow and develop. Our belief in the transformative role of creation, our desire to shape what’s next and our long-term perspective guide our approach. 

“In 2023, we increased headcount globally by 14% to more than 36,500 people, expanded our retail distribution network to over 600 boutiques worldwide, and invested significantly in R&D and technology. We also launched our Open Innovation Function to partner with start-ups, thought leaders and academic institutions.”

Chanel is also targeting the lucrative Chinese market with plans to expand its retail presence. Last year, Chanel experienced double-digit growth in Asia.

Leveraging AI in China
LVMH is leveraging Alibaba’s cloud technologies through AI-powered innovations in retail and online with Tmall — a Chinese-language website for business-to-consumer online retail. 

The e-commerce and technology company in China provides LVMH with tech-driven luxury experiences that will enable it to increase its omnichannel, data and tech presence in China.

Chanel says its makeup category performed well last year in terms of sales.“Alibaba is already a key partner for our Maisons and the Group. The reinforcement of our partnership will help us to further accelerate our omnichannel business growth and to keep on leveraging the transformative capabilities of cloud and AI technologies, along with Alibaba’s world-leading expertise in e-commerce operations,” says Stephane Bianchi, group managing director at LVMH.

Our forward-looking collaboration will deliver unparalleled experiences to our clients throughout their high-end shopping journey.”

The luxury goods giant has begun integrating Alibaba Cloud’s generative AI capabilities, including Qwen — Alibaba’s proprietary large language model — and Model Studio (Bailian), a comprehensive AI model-building platform.

Moving forward, LVMH will get access to a broader array of Alibaba Cloud’s leading technologies and proven products to “further optimize” its business operations, “enhance” customer insights and “streamline” its supply chain management processes to address the Chinese market.

“Alibaba is pleased to enable a transformation of the high-end consumption experience with retail leaders like LVMH through our world-class technologies in cloud computing and AI,” highlights Eddie Wu, CEO of Alibaba Group. 

“This comprehensive partnership has elevated the retail experience for LVMH’s customers worldwide, including China-based consumers on Tmall. We look forward to continuing to build on the strong partnership and innovation journey with LVMH.”

By Sabine Waldeck