By Francesca Fearon
Today, China dominates the conversation of every luxury marketing event because of the sheer numbers involved. The allure of the Chinese consumer especially the Millennials with their taste for fashion and luxury cannot be ignored by prestige brands and was the core topic at a recent marketing seminar in London hosted by Walpole, an association of over 200 British luxury brands.
Invited to discuss this important group of mobile young Chinese consumers was Chloé Reuter, Founder and CEO of Reuter Communications (and co-Founder of The Luxury Conversation). She joined a panel discussion that included Michael Ward, Chairman of Walpole and managing director of Harrods and Katie Thomas, Associate Director of the Bond Street Association.
Data from Bloomberg and Bain predict 400 million Chinese millennials aged between 20 and 34, will take 70% more trips overseas by 2020 (compared to 2015) and account for over half the outbound travel. These figures are important because shopping tourism has huge economic significance. It is estimated that half luxury purchases globally are made by consumers who are travelling. People love to buy a product in the country of origin. Some retailers, like Harrods, are successfully appealing to that group: “China is our biggest market by far and during seven months of the year outsells our UK market,” said Michael Ward. Chinese also account for 23% of overall spend in the Bond Street area, said Katie Thomas.
The question from the audience of 100 representatives from luxury fashion, perfume, hotel and travel brands was what they need to do to attract international visitors, who account for 80 per cent of their revenues.
Apart from their larger disposable income, one clear difference between Chinese and other Millennials pointed out Chloé, is “their lives are completely on digital. If you go to city like Shanghai or Beijing or any large city in China today you are not even using cash. Walk down the street and the beggar has a QR code around his neck. He doesn’t have a pot anymore, because we don’t carry cash.” Therefore, retailers and hotels must understand that access to the Millennial is via their mobile phones.
“We are streets ahead in China in the way we use e-commerce. When we talk to clients and they want these really complex websites I usually say why bother because Millennials don’t even have a computer now. They do everything on their phones.”
If, as Chloé highlighted, bombarding them with digital information by Weibo is a turn off, how best for luxury brands to engage with them? The power of Chinese KOLs (Key opinion leaders) she explained, cannot be underestimated in the way that they help the Millennials to filter what does and doesn’t interest them. “The brands that win,” said Chloe, “are those that incentivise that KOL in an entrepreneurial way.” It is easy to blow a lot of money on a KOL, “but there are great examples of Tods Group, Givenchy and others who are co-creating capsule collections with really cool KOLs. They might not be designers, but they have a loyal following and the brand can track the sales.” A KOL would receive 10% of sales. “The hospitality industry can strike up similar deals with Followers booking a hotel through the QR code on the KOL’s post.”
Another Walpole panellist, Anne-Marie Verdin, director of digital marketing and communications at Bicester Village, a popular destination for Chinese and Arab tourists, described developing communications at “China-speed,” with personal relevant storytelling around young brands and restaurants filmed in a fast and snappy way, and encouraging visitors to the village to film and narrate their own visits as if the viewer is a friend.
Chloe urged the brands to be “brave and adventurous as China is a different market.” For the Millennial it is not the heritage or the craftsmanship that lures them, as it might an older generation. They care more that “that bag is worn by the top Chinese celebrity, KOL or IT girls.”
Her final advice to the audience is “to be humble when your crafting your message and your approach with China, because it is completely different to western markets.”
There were many insights to emerge from the seminar, including the concept of Bleisure (business-leisure) travel. People actively seek employers who allow them to attend overseas meetings on a Friday so that they can then combine it with a weekend stay. The employer in effect is paying for the air travel of a weekend vacation. To assist the traveller, American Express has a travel App that can be activated at the destination airport to help the visitor discover more about the places to eat and shop in that city.
While China dominated discussions at Walpole, there was also a presentation by Ruth Marshall-Johnson from The Future Laboratory, who advises business on the changes shaping travel and hospitality. She spoke of the Bricolage consumers who consider themselves global citizens and prioritise travel over buying a home or paying off debt. They are keen to experience adventure. A survey in the US, UK and China notably attributed this attitude to the luxury Chinese Millennial who wants to indulge their desire for escapism and luxury shopping.
Millennials featured in the first of her three key psychographic narratives that replace the demographic information the industry has come to rely on. It pinpoints the mindset of travellers today.
The Millennial Mindset has access to more information and opinion, and has more consumer power than ever. They demand the best experiences online and offline and are obsessed with good service. Worryingly for retailers in the audience, they prefer to spend money on an experience rather than an item from a luxury brand.
A second group are the Timeless Adventurers who are now 60 plus, optimistic and entrepreneurial, and their mindset has shifted from pampering services to transformative experiences. They are an important consumer as their spending power will reach £10.7 trillion by 2020.
Finally, there are the Conscious Luxurians who are fatigued by commercialism, yet still optimistic that society and industry can adopt sustainable habits to reduce environmental impact. This is eco-consciousness that has moved to a very sophisticated level, but one that the fashion industry has become very keen to embrace.
The Walpole seminar offered a strong and fascinating insight on the future of the luxury traveller and shopper and some concrete advice on how best to lure the all-important Chinese consumer to Britain’s shores.
Thank you for sharing such interesting business insights. To engage with the Chinese millenials it is true you do need to provide excitement and recognition in terms of associating the product or service with celebrity status. Desirability of a brand is built on experiencing the dream, filled with excitement and the unexpected. It may that “fun” is an ephemeral view of happiness but it works with this demographic fantastically well. Simplicity together with speed in delivering the brand message is therefore of the essence, more so now due to increased travel and ubiquity not to mention the speed of social media exchanges.
Thanks Maria – we agree that ‘fun’ is a key aspect, and we are noticing more gamification, even by luxury brands in China.