How Young Affluent Chinese Consumers Spend on Luxury Goods
Curious how young Chinese consumers spend their money?
If you’re a global luxury brand, this post may serve as an eye-opener for you. From a global perspective, the luxury goods market is expected to hit $429,762 million by 2022.
For global luxury brands that seek opportunities in China, which is the largest and the fastest-growing luxury market, it’s time to know and understand this unique market segment, the post-1980s and 1990s generation.
According to the McKinsey’s report on China luxury market, “China is winning half of the luxury world.” So, what should know about these wealthy youngsters whose penchant for luxury brands is anchored with individualism and symbol of success?
#1 Design, fabric and process are relatively important than brand loyalty
Brand loyalty thrives among the older generation. But when it comes to the young wealthy Chinese, they are keen to look at the design, fabric, and process more than the brand itself. So, does this mean that brand loyalty isn’t important? According to McKinsey’s report, it is but relatively less among the young generation.
So, what does this penchant for design, fabric, and process indicate? Why is it different from what the older generation prefer where most of them will likely purchase luxury goods because of the brand?
One of the significant factors for this preference is social influence. This is where the younger generation starts to appreciate these details – design, fabric, and manufacturing process – and are willing to try different brands to experiment on style and what they see on social media, including what their peers recommend or even wear.
This is also an opportunity for fashion designers to renew or freshen up their product lines to cater to the consumers’ needs and wants.
#2 European brands are more popular than American brands
Did you know young consumers prefer luxury goods from France and Italy? That’s what McKinsey report also found out. Aside from these two countries, they also love to buy items from Great Britain. Brands such as Chanel, Burberry and Louis Vuitton are in the list of must-buys.
In short, European luxury brands are highly recognized more than North American brands. However, in connection with the first point, young consumers don’t’ necessarily stick to one brand as loyalty is less relevant to them.
But there’s also an opportunity for homegrown luxury brands. According to the report, one in ten in post-1990s consumers would opt for a high-end Chinese brand. Homegrown luxury brands can capitalize on the experimental behavior of the wealthy young Chinese, unlike the older generation.
#3 Browse and window shop online, but offline and in-store sales are better channels
Online and offline channels are pivotal for the sales of luxury goods. But there’s an interesting point here that will help marketers and also business developers on how to streamline the buying process for these young consumers.
Most engagement and brand exposure happen online. WeChat remains indomitable when it comes to digital marketing with its unified ecosystem that simplifies the e-commerce experience.
Research and gathering information about an item also touch both online and offline channels-from social media to word of mouth and in-stores recommendations by the sales team. Consumers spend 3-5 hours on luxury and fashion information per week.
But while the discovery of products is often online, the most impactful channel for them to buy is through in-stores and influence of a person who’s knowledgeable with the luxury goods.
In a nutshell, physical interactions matter. The customer experience in-stores play a critical role for them to shop where 49% of consumers who were interviewed said they were influenced by the suggestions made by the sales assistants.
So, what do you think of these findings? Does this help you better understand how young, affluent Chinese consumers think and spend on luxury goods? If you need help in digital marketing strategies and also translation, let us know, and we’ll provide a custom plan for you.