China’s well-off middle class is a major target for luxury brands — and so are their offspring. Yet, these young consumers show a markedly different appetite for luxury goods compared to their parents. Here is a summary of several trends about their consumption behaviors; we also reveal how Secoo, China’s largest premium e-commerce platform, is taking advantage of these trends.
From online to offline
Nowadays, China’s young generation is more likely to choose online channels when it comes to shopping, even for luxury brands at relatively high price points. Realizing the rapid development of Chinese e-commerce, an increasing number of luxury brands have become more and more friendly towards online markets. According to “Luxury China”, a report on China’s luxury market, released in the first half of 2017 only 9% of luxury brands in China by June 2016 had yet to launch online sales, compared to the previous year’s 57%.
China’s online luxury market is not simply a transplantation of an offline market. According to a 2017 Chinese Luxury E-Commerce Whitebook report from Secoo and tech giant Tencent, Chinese millennials and Generation Z are set to become the dominant driver of luxury consumption over the next decade. According to the report, the average age of the online luxury shopper in China is now 25, which is 15 years younger than the average European luxury consumer and 20 years younger than the average U.S. luxury consumer.
Niche brands matter
These young consumers are increasingly purchasing niche brands – as opposed to world-famous and high-profile labels – as they seek more personalized and less mainstream experiences. For example, as Hip-Hop culture has gradually become increasingly mainstream, more young people have embraced and become fans of brands such like Supreme and Vetements.
This finding is echoed by Deloitte in one of its recently issued global luxury consumption surveys targeting millennial-generation consumers. According to the report, “These consumers are no longer overly loyal to one specific brand. Instead, they want luxury brands that speak for themselves. They are more willing to pay attention to trendy brands with stories.”
A global collaboration
Chinese luxury e-tailer giants have noticed this trend too.
Recently, Secoo announced its official cooperation with a batch of niche brands, including Mr&Mrs Italy, Corto Moltedo, and Maison Kitsune. Mr&Mrs Italy has attracted the most attention from Chinese consumers with its Parkas series, which combine the durability and aesthetics of coats with the softness of luxury furs. Moreover, popular South Korean TV series such as My Love From The Star have given Mr&Mrs Italy more stand-out brand positioning and propelled them to popularity among younger consumers.
Corto Moltedo, a luxury handbag brand founded in 2004, is famous for its unique, entirely handmade bags. Its designer and founder, Corto Moltedo, is the son of Bottega Veneta (BV) founders Vittorio and Laura Moltedo. The brand’s unique design and exquisite craftsmanship have been extensively recognized throughout the industry. After BV was acquired by Kering, Corto Moltedo inherited the bulk of its craftsmanship responsibilities.
Mr&Mrs Italy and Corto Moltedo have reportedly signed exclusive cooperation agreements with Secoo, and as a result, products of both brands will be sold synchronously across the world at the same price points.
The fact that niche brands like Mr&Mrs Italy and Corto Moltedo sell on the same e-commerce platform as traditional powerhouse luxury brands such as Armani and Versace demonstrates a trend of diversified luxury consumption in which minority and niche brands are at the same competitive starting points as more established, world-renowned labels. Under these circumstances, minority brands may enjoy an advantage as they often have brand narratives that competitors do not.
Oriental styles emerge
Yet another valuable finding in recent luxury studies and reports is the popularization of brands and styles of Chinese or East Asian origin. Global luxury brands are now incorporating a greater number of traditionally Chinese visual elements into them, meanwhile Chinese designers are also trying to establish local luxury brands with Oriental styles. A variety of designer brands have already partnered with Secoo, and these brands boast outstanding design and various traditional cultural elements. Many have become quite popular among high-end consumers.
Overall, with the constant diversification of consumers’ preferences, luxury brands will need to focus their attention on how to successfully cultivate customer loyalty rather than on increasing sales volumes through a single channel. This means offering customers the convenience of omni-channel services – often in partnership with third-parties. Brands likewise need to develop long-term connections with customers – well beyond attractive products – and provide them with exclusive experiences and unparalleled client services.
(Top photo from pinchain.com)