In challenging times, how can brands stay ahead in the world’s largest luxury market? That was the question posed at our Luxury Conversation talk, held at Harrods, London, on the 7th of February in front of an invitation-only audience of senior figures at leading global brands, groups and media.
Challenging times globally – exciting times in China
As some grab headlines and even try to scapegoat their own sales failings on China, we prefer to look at the facts of luxury sales in 2018 remaining strong, with the country a bright spot for brands globally.
Certain industries tell the story well – looking at auto, you may read that in the mass market, sales are down, while focusing on premium/luxury cars, sales are still rising as China’s consumers experience a lifestyle upgrade. Audi was up 10.9% YOY, McLaren rose 122.5%, while Mercedes say that have to design cars to Chinese tastes and China remains the number one market for Porsche.
In hospitality, we recently wrote about the epic hotel construction pipeline as brands continue to invest in China to cater for booming domestic luxury travel.
So amongst the recognised challenges in the global economy, it’s still exciting times for luxury in China. the opportunity has not dissipated – looking at overall outbound traveller numbers, Chinese travellers increased by 13.5% with their spending increasing by 12.3% YOY, according to the World Travel and Tourism Council. By 2020, that number will continue rising at pace.
The trends brands must know
At the London talk, we focused on the major trends sweeping luxury in 2019. Some of the highlights looked at new definitions of luxury, specialised platforms beyond WeChat, fresh ways to work with influencers and how to make smarter connections to the consumer.
New definitions of luxury
Of the diverse new trends seen as luxury by the affluent consumer, eco-consciousness – along with the related health & wellness aspect – shows that it will only continue to rise. Referencing our recent China Insight Report, we can see that green is the new gold for luxury Chinese consumers.
Specialised platforms beyond WeChat
A robust WeChat strategy is the foundation of success for marketing in China. Yet there are new platforms which, if not employed smartly, could mean missing out on capturing millions of target consumers. For beauty, Xiaohongshu presents an ideal platform, while in travel, Fliggy was chosen by the respondents to our survey as being their favourite app for browsing and buying.
Fresh ways to work with Chinese influencers
KOLs in China still present an amazing opportunity, even if the tactic has suffered from a recent bubble effect. Finding, vetting, authenticating and working successfully with KOLs has become a challenge for brands to overcome – yet with social selling more developed in China than in other markets, it’s a challenge that has to be tackled.
What are some fresh ways to find the rewards that KOL marketing can win? KOLs to LOLs: Don’t Laugh Out Loud – switch from looking for Key Opinion Leaders to Local Opinion Leaders. It’s already recognised guidance to work with a variety of smaller influencers rather than one big (expensive) KOL in China. Yet it’s not only about selecting those with a certain kind of WeChat, Weibo or Xiaohongshu following. Local Opinion Leaders means figures in culture – and subculture.
Graffitti artists may not post a ‘eyes look down to the right’ KOL pose on Weibo every day, but some have cultivated a strong following that strongly resonates with a younger audience. Peking Opera figures might not seem like the recognised version of a ‘KOL’, but as proven with Swire Hotels’ The House Collective campaign, My Story My House, culturally-relevant leaders relate and communicate with luxury Chinese consumers in a genuine way with obvious cultural linkage.
Smarter connections to the consumer
Leading international retail destinations understand that at the least, a business must offer Chinese customers Alipay and WeChat pay, and that WeChat mini programs allow for tailored guidance and functionality.
In China, use of personal devices is mobile, and WeChat is the internet. The major search engine in China is Baidu, yet it is rarely used and certainly not trusted; search functions within apps are the consumer’s choice.
A brand’s WeChat mini-program is its website, CRM, booking system, loyalty program app and more. It’s clear that a destination or resort, even outside of China, needs to have a strong digital and WeChat game. Among the strong importance for all things WeChat-related, over 60% of the respondents in our report even considered mobile-controlled lighting and in-room features as ‘very important’.
When hospitality brands talk about connectivity, they need to realise that Chinese guests already experience an absolute seamless connectivity in their daily lives already, and expect the same digital thread to be sewn as they visit highest-end overseas retail or travel venues.