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      LUXURY LOVERS in China
      Why consumers are loyal to luxury



      PERSPECTIVE
    www.thebergstromgroup.com             telling the story of new China
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




www.thebergstromgroup.com                                               telling the story of new China
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?

www.thebergstromgroup.com                                                     telling the story of new China
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



www.thebergstromgroup.com                            telling the story of new China
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




www.thebergstromgroup.com                                                   telling the story of new China
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




www.thebergstromgroup.com                                 telling the story of new China
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.
                            -Cynthia, 23, female, Shanghai


                            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.
                            -Elsa, 28, female, freelancer, Ganzhou,
                            Jiangxi Province




www.thebergstromgroup.com                                telling the story of new China
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




www.thebergstromgroup.com                                                   telling the story of new China
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.




www.thebergstromgroup.com                                                 telling the story of new China
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




www.thebergstromgroup.com                                telling the story of new China
..
  ABOUT US
www.thebergstromgroup.com   telling the story of new China
OUR STORY
     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.

     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.




www.thebergstromgroup.com                                                                  telling the story of new China
GET CLOSER
                      www.thebergstromgroup.com

                      info@thebergstromgroup.com



www.thebergstromgroup.com                          telling the story of new China

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Luxury lovers in China

  • 1. . . . . . . . . . . . . LUXURY LOVERS in China Why consumers are loyal to luxury PERSPECTIVE www.thebergstromgroup.com telling the story of new China
  • 2. 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 www.thebergstromgroup.com telling the story of new China
  • 3. 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? www.thebergstromgroup.com telling the story of new China
  • 4. 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 www.thebergstromgroup.com telling the story of new China
  • 5. 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 www.thebergstromgroup.com telling the story of new China
  • 6. 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 www.thebergstromgroup.com telling the story of new China
  • 7. 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. -Cynthia, 23, female, Shanghai 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. -Elsa, 28, female, freelancer, Ganzhou, Jiangxi Province www.thebergstromgroup.com telling the story of new China
  • 8. 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 www.thebergstromgroup.com telling the story of new China
  • 9. 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. www.thebergstromgroup.com telling the story of new China
  • 10. 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 www.thebergstromgroup.com telling the story of new China
  • 11. .. ABOUT US www.thebergstromgroup.com telling the story of new China
  • 12. OUR STORY 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. 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. www.thebergstromgroup.com telling the story of new China
  • 13. GET CLOSER www.thebergstromgroup.com info@thebergstromgroup.com www.thebergstromgroup.com telling the story of new China