By now every luxury brand anywhere in the world knows about the China luxury memo. If you too are still looking at the “note to self target the China luxury market ASAP” memo. It might be a good idea to understand why the China luxury market is still so hot and continues to grow.
To determine how to target an audience especially a local audience luxury brands must identify the solution. Most luxury brands are doing it all wrong constantly promoting their luxury goods to China without a plan or approach. Which has now become the major problem. Why do Chinese wealthy consumers buy and what are they interested in buying is most important. So let’s solve the problem with a better solution…
According to the Ruder Finn/Ipsos China Luxury Forecast, which surveyed 1,135 luxury consumers on the mainland—about 69 percent of them under the age of 35, reflecting the booming potential of the luxury consumer market in China.
“Chinese consumers buy luxury products mainly to reward themselves or build confidence, as well as to reflect their taste and personality, and will continue to do so this year,” says Elan Shou, managing director China and vice president of Ruder Finn Asia. “We are seeing a change in spending patterns, not a drop in the desire for luxury items.”
Luxury-brand watches appear to be off the shopping list with 54 percent of respondents saying they plan to spend less on watches over the next 12 months. Hand bags (48 percent of respondents) and jewelry (48 percent) are also not priorities for the coming year. But respondents said they would increase spending on luxury cosmetics (43 percent), high-end shoes (43 percent), and top-brand wines, spirits and cigars (40 percent).
“In the past 12 months the luxury market was going strong but we see consumers are cautiously planning for the next year because of the economic news they keep reading about and this could lead to a relative slowdown,” says Simon Tye, Executive Director of Ipsos. “But they will not stop shopping. They will just be buying different luxury items.”
One aspect of the luxury market that has not changed was the status of established luxury brands in the Chinese mindset. According to the Ruder Finn/Ipsos China Luxury Forecast, Louis Vuitton was ranked number one with a top of mind awareness of 39 percent and a spontaneous recall of 65 percent.
The French fashion icon was followed by nine other European big-name brands: Chanel, Gucci, Hermes, Christian Dior, Armani, Rolex, Cartier, Prada and Versace.