CONSUMERS

Top 5 Ways To Win China Luxury

by

Sam Woollard

|

This is the featured image caption
Credit: This is the featured image credit

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

After many years of significant growth the China luxury market has experienced a fundamental shift and noticeable decline in the last couple of years in large part due to the economic slow-down as well as changing consumer dynamics.

The Chinese authorities have also recently appeared to be trying to limit advertising and purchasing in the luxury category imposing new restrictions on spending public money on extravagant events and luxury items, the receiving of expensive gifts as well as advertising. As a result, some luxury brands have experienced a significant dip in sales during the first half of 2015.

“ In reality, the new government measures do not directly target luxury products ”

Luxury brands worldwide are not only worried about China’s anti-corruption drive but are also rethinking their marketing strategies for China. With the upcoming October national holiday in China usually synonymous with shopping and consumer spending on luxury goods should luxury brands be worried about a significant downturn in the market?

In reality, the new government measures do not directly target luxury products but are in fact part of an attempt to hide corruption as well as to pacify the increasing divide between the wealthy and the poor. This may affect brands in the short term but there is still significant room for growth for luxury brands in China. China is still producing more private sector millionaires than the rest of the world and will remain a key focus for luxury retailers. But luxury brands will need to constantly innovate by adapting to new customer expectations.

According to the China e-Business Research Center (CECRC), online sales increased 48.7% to RMB1.6 trillion (USD250bn) during the first half of 2015 representing 11.4% of total retail sales.

“ Online sales increased 48.7% to RMB1.6 trillion during the first half of 2015 ”

Nevertheless as consumer tastes and trends continue to evolve at a rapid pace, luxury brands should carefully monitor the market in order to discover new opportunities to connect with consumers both online and offline. With the rapid growth of Internet and mobile usage (81% of Chinese millionaires use WeChat more than 5 times a day), consumers are increasingly looking for something beyond a luxury shopping experience.

Both Western and Chinese brands need to understand the key trends shaping today’s luxury consumer as well as stay in tune with culture to remain strong in this increasingly competitive market.

Looking back over Chinese history, when it came to the Premium and Luxury categories, logos, price tags and international origins were once enough, as China’s ‘Lost Generation’, having come out of the Cultural Revolution, entered an age of accelerated personal wealth accumulation.

Premium and Luxury quickly became ways to show off one’s success in China’s new socio-economic order. During the early days consumers were less discerning, focusing on brands offering affirmation of status. There was little need for brands to foster a deep, personal connection with consumers.

However, nowadays the role of “Premium” has become more complex as China graduates through different stages of “showing to knowing” Premium. This can be loosely defined as…

The concept of “Show” in relation to premium is very status oriented and driven by materialism. It sees premium as a benchmark of success and proof that the individual is doing better than others. This is associated with bling and brands that express a sense of superiority and achievement.

“ ‘Know’ involves a genuine appreciation and intrinsic knowledge of premium products ”

“Show you know” is the next step from “Show”. Consumers in this stage remain status driven, but also include a degree of knowledge about the things they buy, but only for the purpose of justification (not connoisseurship). This represents a step up from “Show” – brands here need to deliver on experience, knowledge, and status.

The third stage is “Know” which involves a genuine appreciation and intrinsic knowledge of premium products. These consumers are less preoccupied with what others think, and see premium-ness as a personal experience and pleasure. Here, the role of the brand is to create a strong connection with the individual, delivering them a unique and personal experience.

The world of Premium in China is continually evolving and there are a number of interesting shifts taking place. The premium brand landscape is subsequently tapping into these shifts across multiple consumer touch points from communications, to POS, and product. Brands must be bold in creating interactive experiences in both online and offline brand spaces, in order to better engage with consumers and stay ahead of their competitors.

“ From double-digit growth over the last few years the luxury goods market is still set to increase in 2015 ”

From double-digit growth over the last few years the luxury goods market is still set to increase in 2015, but only between 2% and 4%, and with this slowdown comes more challenges for luxury brands to connect with their target customers.

Knowledge and awareness of contemporary Chinese culture should be an overarching theme for brand building and communication across all industries. Experience speaks as loud as luxury products, if not more. As Premium categories and consumers become more mature, brands can no longer simply claim to be Premium – they have to justify it.

Top 5 Ways To Win

1. Fuse Tradition With Modernity

The Beijing Olympic Games marked a starting point that signified a new era of self-awareness in China. The past is being re-evaluated and reimagined under a new, liberated light. The future is now being seen with optimism in terms of its infinite potential promised by the world’s fastest growing economy and the sense of historical momentum that comes with it.

Brand philosophies have developed to become sophisticated statements that draw inspiration from the past but at the same time ride the wave of emerging culture. As such, products and communications are based on traditional ideas and techniques but are adjusted in a contemporary context, connecting pride of heritage with confidence for the future. Traditional motifs, elements and patterns are resurfacing in digital formats and fresh combinations giving brands a sense of historical continuity and eternal, classical value.

Example: Qeelin, a Chinese jewellery brand, is using Qilin, a mythical animal of the past, as its vehicle of communication but has adopted it into a digital format and incorporated a modern woman. It communicates acknowledgement and respect of tradition combined with awareness of contemporary conditions such as female empowerment

2. Experientialism

Mixmind clothing store, Shanghai

Customers are looking for richer experiences in both the real and the virtual world. As mobile and digital connectivity become an inseparable part of Chinese consumers’ daily lives, the idea of reality is being renegotiated and its rarity is being seen as a precious commodity. Moments of intimacy and real personal connection have become important and this also applies to consumer-brand relationships. This has created an increasing appreciation of the need to create ‘real’ and ‘physical’ connections which deliver richer and more real brand experiences.

As a result, retail stores are evolving into theatrical kind of spaces, where brands are creating immersive environments through design, service, and overall experience. Offering richer brand experiences using new digital and mobile technology is becoming an increasingly powerful approach. The Shanghai tang fashion brand offers a special service on their website by allowing users to take a virtual visit of their flagship store in Shanghai. Similarly Jimmy Choo engages customers by providing a virtual showroom allowing customers to see what they’re going to be buying.

Example: Mixmind’s clothing stores provide a multi-sensory experience where smell, sight and touch are aroused; creating an experience that by far transcends a normal walk in a shop.

3. Nature Branded

Shang Xia

Environmental disasters, growing pollution and international public outcry have shifted perceptions towards nature’s increasing value and appreciation. As nature is becoming scarce in exponentially growing cities, it is becoming a rare sellable commodity with great cultural value. Natural themes are becoming increasingly relevant in communicating exclusivity and rarity.

Nature provides ideas and themes for brand philosophies, raw ingredients for crafting products and inspiration for communications.

Example: The products of Shang Xia, a brand for art of living, use raw natural materials to communicate superior aesthetic and unsurpassable beauty that only nature can deliver.

“ Brands that choose to speak in an understated way suggest confidence, superiority & sophistication ”

4. Understated Minimalism

There has been an emerging shift from luxury defined as overt status and ‘bling’ to a greater value being placed on understatement and contemporary aesthetics. In order to win, brands must find more relevant ways to connect with their customers.

Less is more and brands that choose to speak in an understated way suggest confidence in the superiority and sophistication of their products. In a world where branding and products become increasingly complex and ‘loud’ the simplified becomes associated not with lack of attention but with overt thoughtfulness in the process of creation and hence extraordinary and luxurious. Simple product and packaging lines and shapes, subtle colors and details, minimal visual compositions, motifs and product displays have become evidence of luxurious branding.

Example: Moving away from luxury clothing with large logos and shiny surfaces, Mixmind creates products with simple design and almost no branding communicating luxury for those who know.

“ Brands tap into the art world to suggest masterful crafting of products ”

5. The Art Of Luxury: A High Price Is No Longer Enough To Be Considered Luxury

Brands must provide evidence of their quality craftsmanship and rich experiences to justify their luxury status. Cultural secrets can inspire new ways for luxury brands to stay fresh and one step ahead of their customers.

Brands tap into the art world to suggest masterful crafting of products that are works of art for a discerning, eclectic audience.

Example: K11 Mall in Hong Kong is decorated with numerous pieces of artwork and has exhibition panels which change every 3 months. Part of the thinking behind this is that shopping amongst artworks creates a sense that the purchases borrow some attributes from the artworks themselves and hence higher emotional and aesthetic value.

Sam Woollard
Sam Woollard

Director Client Development

Bio Not Found

CONSUMERS

Top 5 Ways To Win China Luxury

by

Sam Woollard

|

This is the featured image caption
Credit : This is the featured image credit

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.

PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.

In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”

The Fondation Cartier pour l’Art Contemparain building in Paris

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

Luxury has cast a cautious eye on China lately, wondering if the market will hold up. Added Value says the China luxury market will continue to grow despite concerns, but brands need to innovate – as follows…

After many years of significant growth the China luxury market has experienced a fundamental shift and noticeable decline in the last couple of years in large part due to the economic slow-down as well as changing consumer dynamics.

The Chinese authorities have also recently appeared to be trying to limit advertising and purchasing in the luxury category imposing new restrictions on spending public money on extravagant events and luxury items, the receiving of expensive gifts as well as advertising. As a result, some luxury brands have experienced a significant dip in sales during the first half of 2015.

“ In reality, the new government measures do not directly target luxury products ”

Luxury brands worldwide are not only worried about China’s anti-corruption drive but are also rethinking their marketing strategies for China. With the upcoming October national holiday in China usually synonymous with shopping and consumer spending on luxury goods should luxury brands be worried about a significant downturn in the market?

In reality, the new government measures do not directly target luxury products but are in fact part of an attempt to hide corruption as well as to pacify the increasing divide between the wealthy and the poor. This may affect brands in the short term but there is still significant room for growth for luxury brands in China. China is still producing more private sector millionaires than the rest of the world and will remain a key focus for luxury retailers. But luxury brands will need to constantly innovate by adapting to new customer expectations.

According to the China e-Business Research Center (CECRC), online sales increased 48.7% to RMB1.6 trillion (USD250bn) during the first half of 2015 representing 11.4% of total retail sales.

“ Online sales increased 48.7% to RMB1.6 trillion during the first half of 2015 ”

Nevertheless as consumer tastes and trends continue to evolve at a rapid pace, luxury brands should carefully monitor the market in order to discover new opportunities to connect with consumers both online and offline. With the rapid growth of Internet and mobile usage (81% of Chinese millionaires use WeChat more than 5 times a day), consumers are increasingly looking for something beyond a luxury shopping experience.

Both Western and Chinese brands need to understand the key trends shaping today’s luxury consumer as well as stay in tune with culture to remain strong in this increasingly competitive market.

Looking back over Chinese history, when it came to the Premium and Luxury categories, logos, price tags and international origins were once enough, as China’s ‘Lost Generation’, having come out of the Cultural Revolution, entered an age of accelerated personal wealth accumulation.

Premium and Luxury quickly became ways to show off one’s success in China’s new socio-economic order. During the early days consumers were less discerning, focusing on brands offering affirmation of status. There was little need for brands to foster a deep, personal connection with consumers.

However, nowadays the role of “Premium” has become more complex as China graduates through different stages of “showing to knowing” Premium. This can be loosely defined as…

The concept of “Show” in relation to premium is very status oriented and driven by materialism. It sees premium as a benchmark of success and proof that the individual is doing better than others. This is associated with bling and brands that express a sense of superiority and achievement.

“ ‘Know’ involves a genuine appreciation and intrinsic knowledge of premium products ”

“Show you know” is the next step from “Show”. Consumers in this stage remain status driven, but also include a degree of knowledge about the things they buy, but only for the purpose of justification (not connoisseurship). This represents a step up from “Show” – brands here need to deliver on experience, knowledge, and status.

The third stage is “Know” which involves a genuine appreciation and intrinsic knowledge of premium products. These consumers are less preoccupied with what others think, and see premium-ness as a personal experience and pleasure. Here, the role of the brand is to create a strong connection with the individual, delivering them a unique and personal experience.

The world of Premium in China is continually evolving and there are a number of interesting shifts taking place. The premium brand landscape is subsequently tapping into these shifts across multiple consumer touch points from communications, to POS, and product. Brands must be bold in creating interactive experiences in both online and offline brand spaces, in order to better engage with consumers and stay ahead of their competitors.

“ From double-digit growth over the last few years the luxury goods market is still set to increase in 2015 ”

From double-digit growth over the last few years the luxury goods market is still set to increase in 2015, but only between 2% and 4%, and with this slowdown comes more challenges for luxury brands to connect with their target customers.

Knowledge and awareness of contemporary Chinese culture should be an overarching theme for brand building and communication across all industries. Experience speaks as loud as luxury products, if not more. As Premium categories and consumers become more mature, brands can no longer simply claim to be Premium – they have to justify it.

Top 5 Ways To Win

1. Fuse Tradition With Modernity

The Beijing Olympic Games marked a starting point that signified a new era of self-awareness in China. The past is being re-evaluated and reimagined under a new, liberated light. The future is now being seen with optimism in terms of its infinite potential promised by the world’s fastest growing economy and the sense of historical momentum that comes with it.

Brand philosophies have developed to become sophisticated statements that draw inspiration from the past but at the same time ride the wave of emerging culture. As such, products and communications are based on traditional ideas and techniques but are adjusted in a contemporary context, connecting pride of heritage with confidence for the future. Traditional motifs, elements and patterns are resurfacing in digital formats and fresh combinations giving brands a sense of historical continuity and eternal, classical value.

Example: Qeelin, a Chinese jewellery brand, is using Qilin, a mythical animal of the past, as its vehicle of communication but has adopted it into a digital format and incorporated a modern woman. It communicates acknowledgement and respect of tradition combined with awareness of contemporary conditions such as female empowerment

2. Experientialism

Mixmind clothing store, Shanghai

Customers are looking for richer experiences in both the real and the virtual world. As mobile and digital connectivity become an inseparable part of Chinese consumers’ daily lives, the idea of reality is being renegotiated and its rarity is being seen as a precious commodity. Moments of intimacy and real personal connection have become important and this also applies to consumer-brand relationships. This has created an increasing appreciation of the need to create ‘real’ and ‘physical’ connections which deliver richer and more real brand experiences.

As a result, retail stores are evolving into theatrical kind of spaces, where brands are creating immersive environments through design, service, and overall experience. Offering richer brand experiences using new digital and mobile technology is becoming an increasingly powerful approach. The Shanghai tang fashion brand offers a special service on their website by allowing users to take a virtual visit of their flagship store in Shanghai. Similarly Jimmy Choo engages customers by providing a virtual showroom allowing customers to see what they’re going to be buying.

Example: Mixmind’s clothing stores provide a multi-sensory experience where smell, sight and touch are aroused; creating an experience that by far transcends a normal walk in a shop.

3. Nature Branded

Shang Xia

Environmental disasters, growing pollution and international public outcry have shifted perceptions towards nature’s increasing value and appreciation. As nature is becoming scarce in exponentially growing cities, it is becoming a rare sellable commodity with great cultural value. Natural themes are becoming increasingly relevant in communicating exclusivity and rarity.

Nature provides ideas and themes for brand philosophies, raw ingredients for crafting products and inspiration for communications.

Example: The products of Shang Xia, a brand for art of living, use raw natural materials to communicate superior aesthetic and unsurpassable beauty that only nature can deliver.

“ Brands that choose to speak in an understated way suggest confidence, superiority & sophistication ”

4. Understated Minimalism

There has been an emerging shift from luxury defined as overt status and ‘bling’ to a greater value being placed on understatement and contemporary aesthetics. In order to win, brands must find more relevant ways to connect with their customers.

Less is more and brands that choose to speak in an understated way suggest confidence in the superiority and sophistication of their products. In a world where branding and products become increasingly complex and ‘loud’ the simplified becomes associated not with lack of attention but with overt thoughtfulness in the process of creation and hence extraordinary and luxurious. Simple product and packaging lines and shapes, subtle colors and details, minimal visual compositions, motifs and product displays have become evidence of luxurious branding.

Example: Moving away from luxury clothing with large logos and shiny surfaces, Mixmind creates products with simple design and almost no branding communicating luxury for those who know.

“ Brands tap into the art world to suggest masterful crafting of products ”

5. The Art Of Luxury: A High Price Is No Longer Enough To Be Considered Luxury

Brands must provide evidence of their quality craftsmanship and rich experiences to justify their luxury status. Cultural secrets can inspire new ways for luxury brands to stay fresh and one step ahead of their customers.

Brands tap into the art world to suggest masterful crafting of products that are works of art for a discerning, eclectic audience.

Example: K11 Mall in Hong Kong is decorated with numerous pieces of artwork and has exhibition panels which change every 3 months. Part of the thinking behind this is that shopping amongst artworks creates a sense that the purchases borrow some attributes from the artworks themselves and hence higher emotional and aesthetic value.

Sam Woollard
Sam Woollard

Director Client Development

Bio Not Found

Related articles

CONSUMERS

5 Must Know Facts About China’s Millennials

CONSUMERS

Report: Decoding Luxury Marketing Milestones in China: Lunar New Year

CONSUMERS

In 2024, expect more of the same. Now is the time to optimise.