China's luxury industry is defined in part by large group of young consumers, significantly younger than their counterparts in western nations or even nearby Japan, and ready to stretch their budgets to buy luxury products, according to the 2011 China Luxury Forecast, launched by Ruder Finn Asia and market research institution Albatross Global Solutions
According to Ruder Finn, a study of this group reveals five key attributes. The young luxury buyers are optimistic, self-fulfilling, mainstream, digital, and price sensitive.
Optimistic: Mainland Chinese consumers expressed the greatest consumer confidence, with 92 percent of respondents intending to spend the same or more than they did last year, even while facing pressures such as inflation and economic uncertainty. The ratio of their counterparts in Taiwan only reaches 20 percent.
Self-Fulfilling: The second edition of the China Luxury Forecast, published in 2010, revealed that “status” was beginning to give ground to “pleasure.” The survey of the “Post 80s” generation in 2011 has confirmed this trend. For young Chinese buyers, luxury purchases are mainly prompted by self-oriented triggers, especially when an individual seeks to treat him/herself. Social aspects, such as showing off, are granted less importance.
Mainstream: China’s “Post 80s” luxury buyers have clearly shown their preference for well-established luxury brands such as Cartier, Omega, Rolex, Chanel, Louis Vuitton and Gucci, which are top of their wish lists, with the origin and history of a brand as the most important criteria they consider. Relying on “trusted” brands, the young consumers don’t show much interest in knowing more about other international brands, posing a new challenge for brands that are latecomers to the Chinese luxury market.
Digital: While points of sale and brands’ official websites remain the most preferred sources of information, vertical websites and news portals ranked second and third respectively, showing there is a strong need for brands to keep their online messages up to date. And not surprisingly, micro-blogging (weibo) is a rising star among luxury information channels, ranking number four among information resources. Furthermore, “Post 80s” consumers are more open to luxury online shopping, with 35 percent of respondents saying they currently buy luxury products online.
Price Sensitive: Limited by purchasing power, “Post 80s” consumers are not really impulsive buyers, rather, they tend to compare price and wait for a better deal. They travel a lot outside Mainland China to buy luxury products, especially to Europe and Hong Kong to get better prices, avoid taxes and have an assurance of authenticity. Therefore, international brands should be fully aware that serving Chinese customers is not a China mission, but an international practice that requires global attention.
Says Elan Shou, managing director of Ruder Finn China: “Young consumers are the future of China’s luxury industry. Understand and address their needs; build solid brands through heritage, authenticity and personality. With the rising influence of digital information, it’s really time for the luxury industry to broaden communication efforts towards cross-channel solutions. We are lucky to be in a booming market where people are ready to spend!”