Is the Chinese luxury revolution fading?
2014 has seen what some could describe as volatile when it comes to the Chinese market, mainly due to changes made by the Chinese government in regards to gifting and locals going abroad to buy their luxury items to avoid paying more tax. Here is a summary of 2014 luxury trends in China:
China’s luxury consumers are more global than ever
The Chinese luxury market is no longer limited to China’s borders as brands’ Chinese customers are more globally connected and well-traveled than ever before. As we mentioned, higher taxes have something to do with the Chinese getting on a plane for Europe, America or Australia even to buy their luxury goods.
When they head abroad, Chinese shoppers aren’t just making business boom at the luxury boutiques, malls, and outlets at their destinations, but they’re also shopping en route at duty-free stores. According to a Nielsen survey of Chinese luxury travellers published in October, airport duty-free stores are almost as popular as boutiques: 24 per cent bought goods at the former and 26 per cent purchased goods at the latter.
China’s e-commerce market went global this year as well: the introduction of new international payment solutions such as Alipay’s ePass and Asia Checkout mean that Chinese shoppers can easily buy from international sites and have the items shipped to their homes.
“New normal” domestic market growth here to stay
Due to growing numbers of Chinese shoppers heading abroad as well as the continuation of the Chinese government’s ongoing anti-corruption campaign, luxury market growth within mainland China slowed to negative 1 per cent this year, according to global consultancy Bain & Company. This marked a continued trend of slowing growth from last year, when the rate stood at only 2.5 per cent after a decade of double-digit growth before the anti-corruption campaign started.
Individualism is in high demand
China’s luxury slowdown was affected by a maturing market this year as affluent consumers expressed strong demand for unique and experiential luxury.
When it comes to luxury items, Chinese consumers have shown a growing interest in buying unique products, local goods while traveling, bespoke items, and collectibles such as art and antiques. As logos and conspicuous displays of wealth decline in popularity both in China and across the world, quality, exclusivity, and authenticity have become key reasons for Chinese consumers’ luxury purchases, according to the results of multiple surveys conducted throughout the year.
Brands worked to prevent overexposure
As China’s luxury market slowed, some of the hardest-hit labels were the biggest ones: logo-heavy mega-brands such as Louis Vuitton and Gucci have seen slowing growth rates as Chinese consumers turn away from bling. Brands suffering from their own massive popularity in China over the past decade have been working hard to prevent overexposure over the past year. While limiting the number of logo-heavy products is one key strategy of Gucci, luxury brands especially zeroed in on China’s enormous fake luxury goods market in 2014.
The most direct approach, however, was Burberry, with its “if you can’t beat them, join them” strategy. The British label made waves in the luxury industry when it became one of the only international luxury brands in the world to launch on Alibaba’s Tmall in April. While some experts argued that the move would dilute the brand’s image, the new shop gave the brand the leverage to ensure that Alibaba remove a large number of counterfeit Burberry goods that were populating the site. Since Burberry’s big Tmall debut, premium brands have slowly but surely been making their way onto Tmall as they continue the fight against fakes.
Chinese luxury consumers go mobile
According to data released by the China Internet Network Information Center in July, it’s now official that Chinese consumers use mobile devices more often than they use PCs. This development has had major implications for luxury brands in terms of social marketing, e-commerce, and even brick-and-mortar retail.
The growth of mobile use in China is closely related to the growing popularity of mobile messaging app WeChat, which hit 468 million monthly active users this year. The app’s rapid ascent to become China’s top mobile messaging site has had many luxury brands rushing to set up their official accounts.
adapted from Jing Daily