PERSPECTIVE LUXURY LOVERS in China Why consumers are loyal to luxury . . . . . . . . . . . .
INTRODUCTION As the world’s second largest market for luxury items, China has earned its seat at the head of the table. KPMG recently completed a survey (“Refined strategies: Luxury extends its reach across China”) to determine how the global economic downturn has affected consumption in China. Interviewing over 900 people between the ages of 20-44 across 15 cities, KPMG uncovered that 62% maintained spending levels on expensive goods in 2009 and 2010. Photos thanks to trendspotters and staff: Jinni, Zhouwei, and Toni
In fact, instead of downgrading to less expensive branded alternatives, consumers largely stayed loyal to their preferred (yet expensive) brands. So why the hesitancy for switching to a less costly alternative? If Chinese youth have gained a reputation as being fickle, why are they less willing to save money for similar products? And what categories are they less willing to experiment in?
Luxury Life or Luxury Product? To find out, we interviewed Elsa, a 28 year-old luxury consumer from Ganjiang, Jiangxi Province. Elsa doesn’t live with her family and was unemployed for part of last year but was still not interested in switching to less expensive skin care and cosmetics. I don't wear high heels and I'm obviously not an office lady. So, it's not suitable for me to carry a Gucci or LV bag. I don't have any luxury clothing items but I do use luxury skin care and cosmetics products because I don't trust small brands for these kinds of products - Elsa, 28, female, freelancer, Ganzhou, Jiangxi Province
We could own a luxury product but we couldn’t afford a luxury life. - Elsa, 28, female, freelancer, Ganzhou, Jiangxi Province To see the related posts: Why Consumers are Loyal to Luxury Luxury Assumptions and Preferences
A Qualified Luxury Consumer One has to have a decent economic foundation to get the title as a qualified luxury consumer. Those who struggle to save money for an expensive bag are not qualified. My parents bought me those luxury products. I assume I would truly deserve luxury products after I am 30. – Sophie, 22, female, Shanghai, PR I have some friends about my age who work at fancy office buildings. They talk about luxury brands and ask each other how many LV and Gucci bags they own. They wear shirts with collars and high heels at work and they dress like that too after work. - Elsa, 28, female, freelancer, Ganzhou, Jiangxi Province
<ul><li>I would buy when I am rich enough that no one would doubt that I am carring a imitation. I always doubt if it's a real one when I see 20 something girls having LVs, but I think my boss (a mid-aged woman) is having a real LV. </li></ul><ul><li>Cynthia, 23, female, Shanghai </li></ul><ul><li>Well personally, I like being natural. I don't like the idea of purchasing luxury items only to show off. They are supposed to be functional and please you. </li></ul><ul><li>Elsa, 28, female, freelancer, Ganzhou, Jiangxi Province </li></ul>
Where would you buy luxury items? Take-away: knowing that prices may be inflated in China and concerned about the quality and freshness of goods, our respondents favored shopping outside of the mainland but knew where they could be bought locally. Hong Kong and the US. Luxury products in China are updated too slowly and are expensive. I usually ask my friends to buy them for me when they go abroad. – Sophie, 22, female, Shanghai, PR Plaza 66 and The Peninsulas Hotel. The Peninsulas is a newly opened hotel, and carries brands that aren’t in Plaza 66. – Kiki, 27, female, Shanghai, boutique sales
What do you buy next? Take-away: Bags are almost old hat (Hermes, Chanel and Balenciaga), youth are keen to test new watches, sunglasses (Chloe and Chanel) and even furniture.
I would like to buy a watch. A good watch is important to a man. – Jay, 24, male, Nanjing, travel agent Furniture is like real estate – it is stable and dependable. – Cynthia, 23, female, Shanghai, executive assistant I think it would be a watch because owning a Switzerland watch is my dream. – Winnie, 23, female, Shanghai, HR representative
<ul><ul><li>OUR STORY </li></ul></ul><ul><ul><li>Established in 2006, The Bergstrom Group has developed a reputation for providing vivid customer immersions for brands and agencies. We began our commitment to China by focusing on youth and have since broadened our scope to include women and lower tier consumers. </li></ul></ul><ul><ul><li>Based in Shanghai, our on-the-ground team of subject matter experts, researchers, trendspotters and photographers is dedicated to telling the story of new China in a way that is both authentic and actionable. </li></ul></ul>