What British Luxury Brands Need To Understand About The World’s Most Competitive Market
By Chloé Reuter, Founding Partner, Gusto Collective
April 26th, 2023
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(Shanghai) For Luxury, the next China is China. By 2025 China will account for half of Luxury Sales worldwide. There’s no doubt that the Chinese Luxury Market is reshaping the Global industry. Luxury in China is different. Forget what you knew about China luxury pre-covid. China post Covid is even more innovative, integrated, exciting, and competitive. First and foremost, though, Luxury in China does not adhere to the old codes of Europe and the US. Luxury in China is democratic, open to all, fresh and part of the daily vernacular. Here’s what British brands need to understand about the world’s most sophisticated and innovative luxury consumer:
The most discerning consumers will be pictured at Art exhibitions, in front of a gorgeous installation by the Chinese Artist Yang Yong Liang at PhotoFairs Shanghai. They’ll share pictures of their latest mini break in a hip Chinese boutique hotel in a gorgeous part of China, doing yoga and wearing Maia Active (China’s answer to Lulu Lemon). They will queue for hours to experience the new Aesop (the skincare brand for discerning intellectuals) in Shanghai or have a book signed by Christopher Doyle at the Modern Media Bookshop. Being cultured is the new Luxury. The biggest challenge for Western Brands going forward is how to be culturally relevant…
People lining up at the Modern Media Bookshop in Shanghai. Courtesy of Modern Media Group.
Everyone knows that China is hyper connected, yet, paradoxically, physical experiences are more important than ever. After three years of restrictions and uncertainty, consumers want to be out and about: they expect to be entertained and engaged. The bar is set so high for offline activations in China, there is no other market which comes even close to replicating the creativity, innovation and lavishness of these luxury brand pop ups and events. Throw out the play book and take risks. It’s not just about commerce, it’s about entertainment. Think about engaging in unusual settings too: Dior built an ice palace during the ski season at Lake Songhua Resort in Jinlin province. Fendi had an outdoor café at ChangBaiShan, another popular ski resort – brands again targeting the experience seeking adventurers in China.
Many Western brands don’t always understand who they are competing with in China. They wrongly assume it’s only their western counterparts. Think again. Chinese brands across all categories such as beauty, retail, hospitality, fashion, F&B and more, are pushing the boundaries. These are not “luxury” brands in a traditional sense, but they’re still taking a growing share of the market, and they connect with young proud consumers in innovative and relevant ways.
Take last week’s Shanghai Auto Show for example: local brands dominated the EV Market. Whilst having a foreign brand car was de rigueur just a few years ago, today China’s top entrepreneurs are swapping Tesla’s for BYD.
After three years, brands are eagerly anticipating the return of Chinese travellers. In our latest report in partnership with Global Blue, we found that Chinese shoppers’ desire to travel is increasing, reaching 76%. Most of them plan to travel internationally within the next six months. (Download the report here: https://www.globalblue.com/about-us/media/chinese-shoppers-in-2023)
However, limited flight capacity from China and delays with visas are still creating challenges. When they do return en masse, brands must make sure to live up to expectations. Understanding their need for experiences, convenience, and most importantly their desire for exclusivity will be key to wining hearts and wallets.
To conclude, China remains the biggest opportunity for luxury brands, but the Pandemic has led to profound behavioural changes amongst Chinese consumers. China’s retail and digital landscape have continued to evolve and transform in a truly unique and innovative ecosystem. At the same time, Chinese luxury consumers are becoming some of the most discerning in the world. For brands, reconnecting with Chinese consumers requires an in-depth understanding of what motivates and engages them. Huge opportunities lie ahead, for brands who are brave and bold enough to seize them.