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China luxury market
 

China luxury market

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    China luxury market China luxury market Presentation Transcript

    • Communicating “The LuxuryElectronic Fashion” in ChinaMarketing Insights Sharing with *** G&G Consulting Beijing, 6th Jan, 2012
    • AgendaChina luxury market overviewKey trends of China luxury marketImplications for luxury brands in China G&G Consulting
    • China luxury market overviewWho are the consumers?How much did they spend on luxury goods?Where did they purchase the luxury goods?What luxury goods did they purchase?Why did they purchase them?How did the brands approach the market? G&G Consulting
    • China’s Four Categories of Luxury ConsumersWho Core Luxury Buyers  Affluent households that spend between 12% and 20% of their income on luxury goods  A total of RMB 20,000-60,000 (US$ 3,000-9,000) on luxury goods  More than half of luxury consumers G&G Consulting
    • Who Majority of growth in 2010 came from new customers Key Highlights  New customers  Existing customers China market is supply  Total spending driven; new store openings create new demand “Our new stores in Tier 2/3 cities not only attract original consumers, but bring in many new consumers. People in these cities have strong desire for luxury goods” PR Manager, Luxury brand EST G&G Consulting
    • How Luxury consumption (2010)much Luxury consumption (2010, Euro B) US Japan Greater Italy France Mainland UK Germany Korea ME HK Russia China China SOURCE: Bain - China luxury market study 2011 G&G Consulting
    • Total luxury spend by mainland Chinese reachedWhere RMB212B in 2010; but >50% spent overseas Total China luxury spend Growth (RMB B) (09-10) 1561 2117 36% Overseas Overseas 38% 378 522 HK&MC HK&MC 500 45% 724 Mainland Mainland 27% China China 684 871 SOURCE: Bain - China luxury market study 2011 G&G Consulting
    • Strong growth, increased by 27% across all luxuryWhat categories. In each luxury category, the top 5 brands account for >50% of sales 2010 China domestic luxury spend (RMB B) Total = RMB 87B Watches Suitcases & Cosmetics, perfume Menswe Shoes Other & personal care handbags ar Jewelry Women swear Top 5 brands by category in alphabetical order SOURCE: Bain - China luxury market study 2011 G&G Consulting
    • “Internationally well-known brand” has becomeWhy one of the top buying factors with “superior craftsmanship” continuing to be the most important G&G Consulting
    • Motivators: Emotive factors , status-seeking andWhy needs based factors emerged as key drivers SOURCE: KPMG - Luxury experience in China G&G Consulting
    • AgendaChina luxury market overviewKey trends of China luxury marketImplications for luxury brands in China G&G Consulting
    • 5 key trends in China luxury marketConsumers expect comprehensive and differentiatedservicesTier 2/3 cities continues to be the “new” battlegroundContinued importance of online platformsIncreasing brand building efforts, and more localizedIncreasing gifting, and more diversified G&G Consulting
    • Chinese consumers are becoming more sophisticated, and1 demanding better service experience Key Highlights  Rising awareness of brands and prices  Less flash, more understatement  More sophisticated and demanding better service experience G&G Consulting
    • Plotting your retail footprint:2 Tier 2/3 cities continue to be the “new” battleground Key Highlights Stores opening from 2008  Tier 1 cities  Tier 2 cities  Proliferation of real  Tier 3 cities estate development in Tier 2/3 cities  Consumer’s attitudes in Tier 2/3 cities towards luxury and wealth similar to Tier 1  However, talent storage and rising labor costs are hurdles fro growth in Tier 2/ 3 cities Stores by the end of Sep 2011 G&G Consulting
    • More and more brands employ social media as an ecommerce3 channel, inspiring customers desire to purchase and build image “Which channels of internet do you normally get information on luxury goods?” Burberry - kaixin Coach - Renren Social media* News portal Video portal Bottega Veneta - Weibo Sina Social media includes: SNS, weibo and blog Lancôme - iPhone apps LV - Jiepang G&G Consulting
    • 3 Internet continues to serve as an important marketing channel in China for luxury brands Key Highlights Internet is approaching magazines as a key information source for consumers of luxury brands Brands invest to provide engaging consumer experience through their China website to promote brand heritage and culture G&G Consulting
    • 4 More localized marketing efforts in 2010, including social and non-profit activities  Brands tried to link themselves with China in marketing campaigns…  Luxury brands continue to actively organize charity events G&G Consulting
    • Gifting remains significant; cash cards enable diversification5 and drive brands to increase desirability “What % of the luxury goods you’ve Key Highlights purchased is for gifting? Own consumption?  Banks launch ExpressPay Cards as gifting card:  Anonymous, different face values Gifting  Can be used domestically ad overseas in retailers that accept UnionPay  However, can’t be recharged or used in ATM Own  Other service companies such as shopping malls also launched anonymous shopping cards  These cards are increasingly used for gifting:  Gift receivers have more freedom to choose the brands/products that they want G&G Consulting
    • AgendaChina luxury market overviewKey trends of China luxury marketImplications for luxury brands in China G&G Consulting
    • Who Where• Tier 2/3 cities, in addition to • Educate consumers in Tier 1 mainland, get returns in the• Could be educated How Greater China and overseas• New customers strategy much Massive market, Why What still growing • Brand, craftsmanship • Potential in all luxury • Innovation design categories • Self-reward & individuality • Top 5 in each category counts as motivators provide new opportunities G&G Consulting
    • Implications for luxury brands in ChinaStrategic approach Winning wayPosition in the right category & • positioningOwn the share of mind and share • Systematic brand awarenessof voice in the specific category building • Digital strategyMake it available • Diversified channelsIncrease consumers loyalty • Wonderful buying journey • CRM G&G Consulting
    • Implications for luxury brands in China Main challenges ahead Implications for luxury brands Increasingly crowded market; Increase brand equity investment and Brand several brands with undifferentiated differentiation image in the eyes of Chinese consumers; Enhance the personality of the brand through Building local events & social / non-profit activities some brands are even not awarded Ecommerce of luxury goods is at the Identify influential bloggers and educate them emerging stage; about the brand Digital models of the operation vary Work with a social media agency to monitor Strategy and react to online conversations Craft brands e-commerce presence Chinese consumers expect to experience Build / enhance service facilities andExceptional superior service in China capabilities in China to cope with overall Service Chinese purchases, not just domestic More sophisticated Chinese consumers Build / enhance CRM systems to manage expect to be recognized and served Chinese consumer base globally CRM equally well everywhere G&G Consulting
    • Merci Beaucoup! G&G Consulting