Changes in luxury shopping behavior among Chinese consumers
Changes in luxury shopping behavior among Chinese consumers Nov.19. 2012
Key Findings• Connoisseurship and self-reward growing while status declining• Luxury consumers have started to develop a good knowledge of brands• Consumers are becoming "more sophisticated" in their tastes• China itself has become the go-to destination for buying luxury goods in 2012 replacing Hong Kong and Europe• Popular luxury brands see a slowdown in their China sales as new and chic brands sales rise• However, one aspect of the luxury market that has not changed was the status of established luxury brands in the Chinese mindset.
Connoisseurship and self-reward growing while status decliningThere has been a continued rise in experiential and connoisseurshipbased behaviors. Connoisseurship and self-reward are becomingstronger motivators and when compared to the findings from KPMG’2008 study, this is largely at the expense of status seeking.The strongest single motivation cited by consumers remains selfreward, which over 40 percent also stating that consumed luxury “topamper themselves” or “too enjoy the luxury experience”.
Source: How Consumers Perceive Luxury Brands in ChinaGrail Research, March 2012
Luxury consumers have started to develop a good knowledge ofbrandsThey are beginning to appreciate the brands heritage and are makingmore sophisticated purchase decisions. For example, the British luxurymenswear brand Gieves & Hawkes is particularly appealing to Chinesecustomers as they come to know its long history of offering the BritishRoyal family, British Army and Royal Navy with tailoring and ceremonialuniforms.This understanding has actually triggered sales for the brand as Chineseconsumers greatly appreciate the royal association and are more inclinedto view the brand as high-class and high-quality.
Consumers are becoming "more sophisticated" in their tastes“A few years ago, it was common for Chinese men to leave thelabel sewn to the sleeve of their suits so that people knew whatbrands they were wearing, now, he says, these same buyersare moving into more subtle, albeit high quality, designs”---according to a report by HSBCs head of consumer brands,Erwan Rambourg. http://money.cnn.com/2012/10/03/news/world/china-luxury/index.html
Patricia PaoCEO of the Pao Principle, whichconsults with luxury brands in China. Luxury shoppers in China want to flaunt their wealth but in more subtle ways, Pao said Chinas one-child policy has also contributed to this shift, since it has led to a generation of "little emperors" among the rich who want to look unique. “ "The luxury market is still moving very quickly, theres still a lot of money for people to spend, and theyre going to be taking a more sophisticated approach. They dont want to just walk around with big LVs anymore.” ----CNN Money http://money.cnn.com/2012/10/03/news/world/china-luxury/index.html
Davy YeA 45-year-old managing director of aforeign communications company “Louis Vuitton, Gucci, Omega, Versace and Hugo Boss? No! Although these luxury brands have been admired by some Chinese people, to others, like me, they are somewhat synonymous with parvenu - a rich second-generation, or of graft-taking and bribery bureaucrats in China." On that day, Ye wore a suit custom-made in a specific tailors shop, a Swiss-made and limited-edition Jean Richard watch, and custom-made shoes, made in an independent shoe studio in Milan. Concerning bags, he said he likes the Punch series from Bree, a German bag-and-case brand established in 1970. http://www.chinadaily.com.cn/business/2012-10/04/content_15796508.htm
Rupert HoogewerfChairman and chief researcher ofHurun Research Institute "More and more rich Chinese are seeking top luxury brands that have long history, top prices and a low-key manner, I met a newly rich Chinese recently who said the most favorable wine brand is La Tache. I consider myself as having a great deal of knowledge of luxury products, but had no idea about La Tache and found out it is a superpremium brand that originated in Bourgogne, France, only after researching it on Google.” http://www.chinadaily.com.cn/business/2012-10/04/content_15796508.htm
China itself has become the go-to destination for buyingluxury goods in 2012 replacing Hong Kong and EuropeAs retailers and marketers have rushed into China, shoppers thereare responding, triggering a shift particularly among consumers livingin China’s so-called Tier 2 and Tier 3 cities outside the metropolisesof Beijing and Shanghai. Survey respondents said that China will betheir first stop when it comes to all luxury categories, a shift from lastyear, when the same survey found that Hong Kong was the firstdestination for their purchases of watches, jewelry, cosmetics, shoesand handbags, and that Europe was their first destination for luxurywines, spirits and cigars. The Ruder Finn/Ipsos China Luxury Forecast, June 2012
Second-tier citiesChinese Consumer Report- Luxury, ROLAND BERGER, Oct. 2012
Popular luxury brands see a slowdown in their China sales as newand chic brands sales riseBurberry Group,Richemont and LV released data showing thedecreasing Asian demand, especially the China market. But not allretailers are hurting, Paris-based Hermes International SCA reportedon Aug. 30,2012 a 28 percent rise in profits in the first half of its fiscalyear compared to last year and raised its earnings estimate for theyear. PPR that owns Gucci and Bottega Veneta, posted a salesincrease of 24.4 percent in Mainland China. Belgian Fashion houseMaison Martin Margiela is also doing well in China. It planed its newestand biggest boutique in Beijing last year and see huge increase insales.
Some brands that are getting popular among Chinese consumers 80005,000 Brand Mention Brand Mention 70004,500 # of Taobao listings4,000 6000 # of Taobao3,500 listings 50003,0002,500 40002,000 30001,500 20001,000 500 1000 0 0 10-11 11-12 10-11 11-12 Goyard Maison Martin Margiela
However, one aspect of the luxury market that has not changedwas the status of established luxury brands in the Chinesemindset. According to the Ruder Finn/Ipsos China Luxury Forecast, Louis Vuitton was ranked No. 1 with a Top of Mind (TOM) awareness of 39 percent (without prompting) and a spontaneous recall (Spon) of 65 percent. The French fashion icon was followed by nine other European big-name brands.
Chinese Consumer Report- Luxury, ROLAND BERGER, Oct. 2012