China's luxury buyers are younger compared with those in
traditional luxury markets. They are tech-savvy and spend an
increasing amount of time on computers and smart phones.?In the
next couple of years, the dominant luxury buyers will be 25-to-35
The potential for buying luxury goods online is huge, but not
enough brands take advantage of e-commerce opportunities. Recently
Emporio Armani launched a Chinese-language online shop,
emporioarmani.cn, the first example of a high-end fashion brand
launching an online shop for China. Official online stores also
help reassure people that they are buying genuine items--not a
small concern in a country full of fakes.
Cross-border e-commerce plays a role here, too. Far more
e-tailers such as www.net-a-porter.com and Saks.com offers overseas
shipping. American Express, meanwhile, has launched its
globaleshop.com in China, offering AmEx cardholders a personalized
address in the U.S. and U.K. so they can shop online and ship goods
to that address. A logistics service then sends everything to
China. Borderlinx.com offers a similar service.
2. Embrace diversity
The sheer size of the country and huge disparities in economic
and cultural development among regions means that there is no
"Chinese" luxury consumer. It's a heterogeneous market with
distinctively different groups. While the majority of the country
is still in the process of being introduced to the concept of
luxury, the most affluent and discerning luxury consumers are going
beyond fashion and accessories. Art collections, private jets,
European-style private education and customized luxury trips are
just a few examples of China's luxury market becoming more mature
3. Keep an eye on Chinese brands
China is a very new market and currently does not offer much in
the way of tradition and heritage, nor its "own" luxury brands--but
Hermes, for instance, launched the Chinese brand "Shang Xia"
last year in Shanghai. Everything about Shang Xia is made in
China--it is a Chinese brand, developed in China by a Chinese team.
It's still early days but the brand is already looking at expansion
and Florian Craen, managing director for Hermes in North Asia, sees
considerable potential for homegrown luxury brands, while noting it
will take time to build local luxury brands.
Shanghai Jahwa has created Shanghai Vive, a new line of homemade
and high-end cosmetics. Jahwa opened the first Shanghai Vive
boutique last summer in the newly refurbished Peace hotel. The
brand brings a touch of old Shanghai history and glamour,
reflecting the town's heyday in the 1930s. It's the first such
high-end local cosmetics line, with beautiful lavish packaging--and
prices to match.
4. Look north and west
Luxury is expanding beyond first tier cities, because China's
rich do not just live in Shanghai, Beijing, and Guangzhou. Luxury
brands are waking up to this fast and focusing their efforts on
building brand awareness in second and third tier markets.
Chongqing, with one of China's highest GDPs, is becoming a mecca
for luxury brands. Gucci, Prada, Louis Vuitton are all setting up
shops there. But don't forget cities like Harbin, Dalian, Wenzhou,
Taiyuan, and Urumqi. The battle of the luxury brands will
definitely be played out in these other areas.
5. Offer experiences and get personal
Success for luxury marketers depends on more than good branding.
They need to go beyond the big numbers, and understand what
consumers are trying to achieve, then help them fulfill that dream
and goal. What makes a luxury item seem luxurious is how it makes
the consumer feel, what experience it provides, and the message it
sends to the buyer's entourage.
Luxury marketers need to offer a personal relationship and
realize customers are looking to gain knowledge and expertise. For
these wealthy consumers, the big price tag and the label alone do
not necessarily equate luxury, but personalized service and a
unique experience will give them an edge over their peers.
Appealing experiences range from Louis Vuitton's home shopping
visits for VIP customers, and the flagship stores for Vacheron
Constantin and Alfred Dunhill located in colonial villas in
Shanghai. Vacheron Constantin has installed a handmade leather safe
made up of around 15 individual safes. Avid watch collectors store
their watches here and make appointments with the Swiss watch
specialist when they wish to use them and show off to friends.
Alfred Dunhill, in an identical villa next door, showcases products
alongside elegant museum pieces, a bespoke tailoring room, and a
traditional English gentleman's barber.
Luxury brands will continue to thrive by establishing a
one-on-one relationship, and focusing on educating customers.
Chloe Reuter is the founder of ReuterPR in Shanghai, which
specializes in communication for luxury brands.
Return to the Ad Age China home page