How China is shaping the future of luxury brands
Luxury is thriving and can thank China for it: the country is driving the sector recovery (Fondazione Altagamma, June 2021). Resilient and optimistic, the Chinese market is eager for more high-end purchases and will account for 45% of the global luxury market by 2025 and € 43,4 billion (Bain & Company, China’s Unstoppable Luxury Market, December 2020). Meanwhile, both the Chinese middle class and numbers of billionaires are expected to double.
The new destination for luxury shopping
The closing of international borders accelerated the repatriation of purchases. In 2020, China mainland luxury consumption (online and in stores) increased of 48% (Bain & Company). In a context still uncertain, most people won’t internationally travel in the next 6 months: a situation highly beneficial for Hainan, the duty-free paradise of the Middle Kingdom.
This phenomenon is not meant to stop as consumers get more interested in national brands. The emergence of guochao, revisiting Chinese heritage, and the meng trend strongly appeal to Chinese buyers while challenging westerners.
The New Chinese Luxury Buyer
Chinese GenZ obsesses luxury groups. However, the Chinese silver economy (60-80 years old) with a market share of € 90 million might be their next Eldorado as well as men shoppers, often disregarded.
For long considered less educated when it comes to savoir-faire or taste, Chinese customers indubitably transitioned to influential luxury connoisseurs. Hard luxury purchases (watch and jewelry) are booming as the market becomes more mature. Shifting from product-driven to experiential luxury, Chinese now expect strong storytelling and personal attentions from their favorite brands.
The polarization of luxury values remains a challenge. Many are still searching for easily recognizable logos and fun extravagant looks while the West is sobering up, embracing slow fashion and timeless craftmanship.
The Future of Retail
Digital native millennials expect a memorable retail experience that can’t be limited to a product presentation since virtual sales, conducted by key opinion leaders during livestreaming shopping shows, have become the new normal.
Retail flagships can increase their customer satisfaction by favoring omnichannel experiences reconciling every touchpoint of the client journey. Creating a different physical experience while maintaining the fun community spirit of digital channels led China to become the testing ground for bold brick-and-mortar concepts.
When it comes to product offer, luxury actors pay tribute to the local culture celebrating festive seasons with dedicated capsule collections (lunar new year, Chinese Valentine’s Day, Single’s Day “11.11”). Still, the in-store client experience and selling ceremonies are rarely tailored to cultural specificities.
China is leading the luxury industry but also retail and digital toward their future. Being an international agency, PRESENCE is the perfect partner for the reinvention of luxury brands omnichannel selling ceremonies and the adaptation of their mystery shopping programs to local Chinese customers in Asia and Chinese tourists across the globe.
© 2021, Justine Grosset pour PRESENCE