China’s rich make up almost a third of the world’s luxury shoppers according to Reuters. It comes as no surprise that the largest fashion houses released a collective sigh when their domestic sales in China saw a recent uptick. Tiffany & Co. reported its first sales increase in eight quarters as a result of strong sales in countries like China and Japan. Consumer spending in the country brought Alibaba a 39% increase in sales. Burberry and Kering also happily reported positive sales in the Asian markets.
Retailers can point to a few reasons for the positive change: Chinese citizens are traveling abroad less, price differences have narrowed between China and Europe on luxury goods and, lastly, the depreciation of Chinese currency lowers its purchase power abroad.
As Chinese luxury shoppers find goods in their home country, the “new normal” is being felt from Rodeo to Champs-Élysées. One luxury retailer in Beverly Hills who was interviewed for this article recounts how a couple of years ago Chinese tourists would purchase two sizable engagement rings at once, “just because.” Now, those types of purchases by wealthy Chinese in the United States are numbered as this demographic opts for domestic purchases. Nevertheless, this doesn’t stop retailers in the states from trying to lure in Chinese buyers with perks like Mandarin speaking sales people and exclusive shopping event invites.
In order to succeed in the Chinese market, it is important for a brand to take into consideration the distinctive digital media landscape in the country. Business consulting firm Bain & Company reports that nearly 80% of people they surveyed “normally get information on luxury brands from the internet or apps.” A whopping 60% of the respondents said that Weibo and WeChat are their online source for information on luxury goods.
American and European luxury retailers should take note and invest their resources in targeting Chinese customers where it matters most, the apps unique to their country. Luxury goods are also realizing the need to develop strategies for Single’s Day and Chinese New Year in order to target the Chinese consumer.
A failure to plan for these two holidays in a marketing calendar can result in missed revenue opportunities.
Luxury retailers are bracing themselves for the future while keeping a clear goal in mind: courting the Chinese consumer is a must in order to be successful worldwide.