Chinese consumers are set to contribute almost two-thirds of global growth in luxury spending – behaviour increasingly being driven by a new ‘hyper-connected’ demographic. Meanwhile, recent events combined with technology adoption has pivoted consumer attitudes and their relationship with brands.

So who are China’s luxury consumers?

Traditionally, it’s the Post-80’s – the generation born in China after 1979, when the One Child Policy was introduced to curb population growth. This generation is the main driver of luxury buying right now, having grown up as China emerged as an economic power. They’re now at the peak of their careers, buying luxury goods to demonstrate spending power and success.

But now, post-90s Millennials, coupled with Gen Z, are the emerging powerhouse of luxury spending – their purchasing motivations are less about superiority and more about self-expression and satisfaction. And it’s with these generations – a dynamic and digitally engrossed group – where the real opportunity for luxury brands exists.

 

With a new wave of luxury shopper, comes new rules of engagement.

While purchases are mostly made in store, discovery is nearly always digital first for this new luxury audience. At every touchpoint, from e-commerce to in-store, and of course through social media, consumers are seeking to pick up information about the latest luxury products, the celebrities who promote them, and the lifestyles they embody.

These consumers view ownership and affiliation with luxury brands as a form of social capital; not just something to wear, but a lifestyle choice that marks them as part of a distinct and exclusive community. That community is constantly being fed a glittering stream of “always-on” online content, keeping pace with consumer demand in a digital world that is nothing short of a way of life.

 

Just like the West, social media, KOLs and influencers are the number one driver of luxury purchases for this new, hyperconnected generation, as they serve to contextualise luxury products in daily life. However, honesty and peer-to-peer interactions on social platforms are valued above all by consumers.

There is huge opportunity to engage the attention of consumers in the world’s most lucrative and fastest growing luxury market – but brands need to be at the forefront of this hyper-connected group or risk losing out to more digitally savvy rivals.

From our expertise in the luxury sector, these are our 5 key rules and commercial opportunities to fuel engagement with this affluent cohort.

 

Rule 1: Make sure social is front and centre

China is the largest mobile market globally, with 1.426 billion unique devices in June 2020 (iResearch). These consumers expect retail access and product information any time and anywhere, supplemented interactive games, product trials, service reservations, consumer advice, and more.

Social channels are a crucial luxury brand tool in brand building and creating intimate personal moments with consumers – ensure you create ongoing significance and content in their lives.

 

Rule 2: Use the store as a media channel in itself

While e-commerce is growing in China, the physical market still dominates, with 90% of young Chinese consumers favouring in person experiences with sales staff in brand stores. Luxurians also crave elite, inner-sanctum experiences; reimagine your in-store experiences, catering to young consumers’ desire to feel different and valued.

 

Rule 3: Engage the KOL’s – seek the KOC’s

Influencer marketing is a powerful strategy in China reflecting the principles of effective relationships – authenticity, integrity, trust, adding value – driving further reach than brand owned channels. Key to success is ensuring a deep level of collaboration between KOLs and their audience and employing a portfolio approach to KOL engagement: working with celebrities and influencers with varying degrees of star power.

 

Rule 4: Appreciate that brand is now about self-expression

China’s young luxury market offers opportunity for savvy brands to capture the ever-shifting zeitgeist and their need for self-expression. Position your brand as a means of matching and enhancing the consumer’s personal style, placing a premium on exclusivity and exploring the role for customisation/personalisation to make luxury purchases feel even more unique and special.

 

Rule 5: Demonstrate an understanding of and respect for local culture

Chinese consumers are increasingly repatriating their spend, with sixty per cent of affluents aged 21-34 purchasing an item from a Chinese brand in Q1 2020 (Affluential, 2020) enticing domestic consumers, for whom homegrown artisan products and services express not only wealth, but also nationalistic pride.

So when it comes to Western brands resonating with Chinese consumers, it is imperative that the brand is able to demonstrate their cultural awareness, balancing this with a modern inspirational twist.

 

Next steps

The way that luxury brands are engaging with customers is changing. Social-commerce and livestreaming no longer merely serve as engagement channels, but increasingly as an important part of the overall customer experience journey. Our work in international luxury retail has helped world-famous brands bridge the phygital engagement gap.

Interested in how we can help create deeper, more emotional connections between you and your customers? Let’s talk.

 

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