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An exploration of the luxury market through trends, insights and expert opinions
Chinese luxury consumers are swapping global names for regional nuances, giving brands a new, hyper-local challenge, says Nick Cakebread, founder of The Luxury Conversation.
Chinese Millennials don’t want to carry the same luxury labels as their parents. Instead, they want to show their peers that they have time to discover emerging talent.
It’s safe to say that Chinese consumers are even more knowledgeable of the world of luxury than their Western counterparts. In fact, luxury is a way of life for affluent Chinese consumers, and this arguably affects brands in many ways.
One of the major changes of recent years has been the shift from making blingy, big-logo purchases to a more curious look at luxury. Today, it’s about being discerning, as having a savvy knowledge of luxury goods expands from China’s first tier cities and well-travelled set of affluent consumers, to reach wider, regional audiences.
In fashion, for example, Chinese Millennials don't want to carry the same labels as their parents did. They want to show their peers that they are not only knowledgeable about fashion, but have the time to discover those more considered labels, emerging Chinese designers, and overseas names.
International labels are partnering with local Chinese creatives to pioneer new styles and maintain the respect of Chinese consumers.
However, this shift isn’t only in terms of their desire for fashion items and jewellery. Now, all product and service categories across Chinese luxury are witnessing a move from mass to niche. One example is the world of beauty, wherein there has been a significant rise of niche brands – not only independent names such as Babor, or entire category-specific retailers such as SpaceNK, but also the global giants of the beauty. They have been forced to respond by rapidly acquiring or producing niche-styled brands.
For luxury brands, this is already having a major impact of their strategies, with international labels partnering with local Chinese talent or creatives becoming a wise way to pioneer new products and – crucially – maintain respect and trust with their Chinese consumer.
Luxury hospitality is also having to evolve to meet this local mindset, with the smartest hotel chains and properties turning their attention to niche or culturally-laden products and amenities. Some have opted to use spa products that are locally relevant. The Middle House in Shanghai, for example, proudly promotes its use of Cha Ling products – LVMH’s Sino-French brand – which are based on Chinese tea.
Taking this celebration of culture and country further, The Middle House and several other Chinese hotels are engaged not merely with native key opinion leaders (or KOLs are they’re known) but also with Chinese artists, designers and classical musicians, in order to ensure their properties have a strong branding that balances east and west.
There is no ‘one size fits all’ strategy because change happens so fast in China, whether in terms of society, culture or business.
And while we know that Millennials have been driving luxury sales in China for several years, Gen Z are paving the way as a generation that is so much more unique, in so many ways. For example, gender identities are much more fluid among China’s Gen Z than they are in the West. Plus, these consumers have grown up with everything being marketed to them as ‘new’, therefore any brand that's actually ‘new to China’ must be prepared to constantly strive to stand out in order to form a real connection of interest with this audience.
Ultimately, brands must realise that the size of the country and the difference in regions, provinces, age groups and lifestyle will mean divergent local expectations of luxury products and services. As a result, there is no ‘one size fits all’ strategy because change happens so fast in China, whether in terms of society, culture or business.
Luxury labels must instead prepare to be agile in the practical sense of the word, with extensive, local expertise that ensures a complete understanding of each day as it passes. Only then, as the new disruptive changes occur, can a company adapt and deal with the unique challenges that the Chinese luxury market presents.