If luxury brands want to succeed in China over the long-term, they must focus on Chinese Millennials.
To gain more understanding of this premise and to go deeper into the issue, The Luxury Conversation hosted a Briefing in February 2018, at The Mark Hotel in New York City. The U.S. event followed up on the recent successful London Briefing.
Speaking to a room full of guests from top global brands, agencies and media was Chloé Reuter, Founder and CEO of Reuter Communications (and co-Founder of The Luxury Conversation), with guest speakers Ketty Maisonrouge and Richard Chen.
Ahead of this invitation-only event, The Luxury Conversation conducted a survey of Chinese consumers’ preferences and idea about luxury shopping and travel in U.S., so that glean their true views and opinions.
We spread the survey organically through social media, with a positive response of over 250 surveys taken. This in itself shows the eagerness and interest in the modern Chinese generation to take part in and be associated with a luxury lifestyle.
Other key findings of our survey:
We asked two questions in two separate sections – ‘Where have you travelled in the U.S.?’ and ‘Where do you plan to travel?’
Interestingly, the following cities came out in exactly the same order for both answers – with New York being significantly more popular, as a clear leading destination.
The top 3 were each comfortable in their position:
- New York
- San Francisco
- Las Vegas
With other cities being very close in popularity:
- Washington DC
Travel – research, deals and booking:
To the question of ‘What hotel have you stayed at in the U.S.?’, the usual suspects such as Hilton, Marriott, MGM, Sheraton, Four Seasons, IHG were all equally popular – with a notable choice of AirBnB being specified by almost 20% of people.
Two big leaders were Ctrip and Booking.com taking the lion’s share of recommendation and booking options. Mafengwo and Zhihu took a strong second and third place respectively, with Qunar, Zanadu and Tuniu making up the ‘others’ with a much smaller percentage share.
At the New York Briefing, several key points came up:
Distinct demographics from west to east
“A lot of brands might argue that currently it’s still the older generation who can afford to make large luxury purchases, they are the ones covering the bottom line, which at least here in the US is true,” explained Ketty Maisonrouge, “But brands need to be looking ahead. It is important for them to start figuring out how to serve Chinese Millennials now … as they do have the purchasing power.”
Everything is digital, everything is social
During Chloé’s presentation, she emphasised the need for brands to go digital in China, “Print is for grandparents. And so is TV. In a survey we conducted last year with over 100 Chinese Millennials, we found that 95 percent of them had not bought print media in the last year. This, however, does not mean Chinese consumers aren’t consuming content, it just means that they are consuming it on mobile devices instead.”
Actually, when developing their China strategy, brands should not think about going digital, they should think about going social and mobile, “Many Chinese Millennials don’t even own a computer, they do everything on their mobile devices” Reuter shared, “They don’t visit websites, instead preferring to get information from social media accounts.”
E-commerce: Get the marketing right and sales will follow
When it comes to choosing an e-commerce platform, the speakers agreed that there is no one right answer. Richard Chen pointed out that Chinese online platforms all have their pros and cons, and brands need to speak with the platforms and find out which one will provide them the best deal. He went on to say that, “In the end, the sales platform is not as important as you think. You do a good job with the marketing and Chinese consumers will find a way to get your product. They will do a ton of research, search everywhere online, and if they can’t get it there they will even purchase it when they are traveling overseas.”
Retail: experience > product
As for brick-and-mortar stores, Chen was emphatic that they should focus less on displaying products and more on creating experiences. Chinese Millennials are bored with regular shops and are seeking something new and, of course, something selfie-worthy.
Reuter agreed, citing the Korean eyewear brand Gentle Monster who has generated massive sales in China through their unique shops where the focal point is art and not their product.
Welcome the millions of Chinese travellers
Chloé also spoke about the importance of preparing US retail locations to accommodate Chinese travelers, “NYC is still a huge shopping destination for Chinese travelers. It’s important for brands to give Chinese consumers a seamless experience when they travel. If your store or hotel in London, Paris or Rome doesn’t accept WeChat pay and AliPay – why not? Ensure Chinese-speaking service staff at all times. Integrate their O2O experience by having QR codes in your retail spaces that let them follow your social media and shop more on your Tmall store.”
Plant the seed in China
However, she said it’s best to reach them while they are still in the planning phase, “Chinese millennial consumers do a lot of research before purchasing luxury goods. 80% of the items Chinese travelers purchase while abroad they had already researched and decided to buy before they left home.”
Chinese KOLs = Content – and Trust
Another topic audience members were eager to discuss was KOLs or Key Opinion Leaders, who are an essential element of Chinese marketing campaigns.
One attendee asked whether influencer marketing was still effective in China or if the trend had been overdone and was cooling off, to which it was conclued that not only is the trend is still going very strong, it is in many ways ahead of the U.S. by several years. Chinese influencers develop very close relationships with their followers who tend to think of them as a good friend, trusting the influencer’s recommendations — even when they know they post is sponsored.
KOLs are People Too
When you think celebrity advertising – or even the biggest KOLs – you might think it’s about budget. But while a movie or sports star can be the face of almost anything for a paycheck, KOLs, both big and small, have built their following through authenticity and passion. A reader/follower/watcher senses true passion of an online KOL, a TV Host or other, and follows due to the genuine passion that comes across.
This means that the Brand-KOL relationship is just that – a relationship. It takes time and it needs the KOL to enjoy working with the brand and its people.
While use of social media and the urge to expand into China has immediacy, the reality is that the best KOL collaborations are crafted over the long-term.
Richard and Ketty agreed that top KOLs in China are very effective, but brands need to book them in advance as they are highly sought after.
Several guests mentioned the high cost of working with Chinese influencers. “It’s true,” said Chen, “China is becoming more expensive for marketing. In the future, brands will need either a big marketing budget or very creative campaigns.” Yet Richard also suggested that, if budget is an issue, brands could consider working with smaller, more niche influencers.
Chloé added, “The individual reach of industry experts and micro-influencers may be lower, but the readership could be much more relevant and engaged in what they are reading.” She also recommended that brands try to develop relationships with KOLs first, as having that personal connection might help them secure a better deal later on.