The article below was originally published in BrandZ’s Top 100 Most Valuable Chinese Brands report.

The Chinese consumer has evolved at a bracing clip. In a country that has defied previous notions of international development to bring millions out of poverty in less than three decades, this is inevitable. Now, media and industry watchers are teeming with reports on how China’s burgeoning middle and upper-middle class of nouveau riche consumers are changing the market in an anxious bid to keep up with their tastes. Most evident and eagerly discussed is the shift in China’s luxury consumption.

China is now the world’s second largest luxury market. With a rapidly expanding middle class projected to reach 50% of the population by 2020, and an estimated 30% of consumers having already made luxury purchases, China’s latent and existing luxury purchasing power is phenomenal. To better understand who they are and break into this hugely prosperous potential market, marketers have developed new ways to talk about China’s luxury consumers. Rather than demographics such as age and income, psychographic information reveals more about today’s luxury consumers as it sheds light on how they self-identify and who they want to be. Middle class aspirants, fashionistas, entrepreneurs and luxury role models are the dominant forces driving luxury consumption in China today. It is increasingly apparent, that there is no one luxury market; as with many things, there are many Chinas.

Over the past few years, media and industry watchers have eagerly followed the evolving preferences of this vast cohort of luxury spenders. The cause and effects of their relatively recent shift from ostentatious luxury spending to one driven more by refined taste and connoisseurship has been a leading topic of industry discussion for some time. Logo-fatigue and an increased desire for self-expression are now established trends, results not just of the crackdown on luxury gifting, but also just a natural progression to the next stage of luxury consumption. More confident and knowledgeable, Chinese increasingly look for brands that reflect their unique sense of individuality and sophistication.

And brands have responded accordingly. Determined to stay relevant in this lucrative market, luxury brands (and many non-luxury for that matter) have toned down loud logos and focused on understated aesthetics. Most have launched limited editions for a greater sense of exclusivity, and many have integrated Chinese cultural elements to show they understand today’s more confident Chinese consumer. But in a market that has proven, time and time again, its uncanny ability to evolve, is this enough to stay ahead of China’s luxury consumer?

There is a greater force driving these surface level expressions of changing consumer preference: China’s concept of luxury has changed. Today, Chinese people expect more from luxury. Where Chinese once purchased luxury as an outward display of wealth and social status, luxury brands now must connect with consumers on a functional and emotional level. Beyond providing an exceptionally crafted product that is elegant, exclusive and encourages self-expression, luxury now has to be value oriented and offer personal meaning.

In other words, Chinese want a complete luxury experience. This luxury experience takes consumers from the initial phases of contact with the brand, to interacting with the brand, and finally to how the brand makes them feel.

Key Actions for Creating a Total Luxury Experience

1. Build brand presence on social media sites

Digital connectivity has become an essential part of Chinese consumers’ daily lives, with mobile playing an increasingly important role in how Chinese socialize and gather information. As luxury has been so closely linked to social status, China’s luxury consumers rely more heavily on social networks to obtain information on which brands to buy compared to consumers of other products. Digital platforms are therefore an integral aspect in how China’s luxury consumers learn about and experience brands.

As Chinese warm up quickly to new brands, staying ahead of the curve by owning new platforms and digital spaces is essential for luxury brands to build brand awareness and equity with today’s hyper-connected Chinese consumers. Digital and mobile are also important tools to foster positive relationships with consumers, with 360 degree services, exclusive content, and most significantly, intimate one-on-one interactions between the consumer and brand via platforms like WeChat, China’s largest social networking platform. Digital connectivity is inextricably linked to the overall luxury experience.

2. Design immersive luxury experiences at retail

As the face of a brand, brick-and-mortar stores are pivotal in the way consumers experience luxury in China, and have great potential to create the real immersive luxury experience Chinese want.

First, though the majority of Chinese luxury purchases are still made overseas, largely as the amount of Chinese outbound tourism continues to increase, over 75% of these consumers also make luxury purchases in Mainland China. What they bring back is a heightened awareness of the quality customer service experienced abroad and therefore, greater expectations for superior services in China. Increasingly sophisticated Chinese consumers now demand services that are consistent, professional, friendly and unpretentious.

What’s more, Chinese luxury consumers shop in groups. The retail environment necessarily morphs into a social venue that needs to be entertaining. Exceptional design, interactive touchscreens the size of mirrors, and novelty sections for in-store customization, coupled with a stellar sales staff, turn the retail experience into a multi-touch point event consumers are thrilled to share with their friends, both in person, and on their own digital social networks.

3. Connect with new consumer confidence

The 2008 Beijing Olympic Games marked a significant turning point in the eyes of Chinese consumers that signified a new era of self-awareness. China had stood up and earned a prominent position on the world stage. With new found confidence and pride, Chinese consumers began to see the future with infinite potential promised by the world’s fastest growing economy and the sense of historical momentum that propels it.

Luxury brands should tap into this energy to engage today’s Chinese consumers on a more emotional level. A brand that recognizes the importance of its heritage, but is progressive and forward looking will inspire Chinese luxury consumers who will identify with the brand’s sense of optimism and core values.

In the end, what it really comes down to is the entire brand narrative – from what is does on digital, to how it acts in-store, to its core guiding values – that will govern the luxury consumer’s overall experience. And it is the overall experience that then dictates how consumers feel about a brand which ultimately determines if a brand truly lives up to its “luxury” status. After all, the answer to what will define luxury over the next few years for sophisticated consumers is, “luxury will be whatever you want it to be.”

Staying true to your brand’s core values and weaving your brand narrative across channels in a holistic way is essential to exciting and building a loyal base of Chinese luxury consumers today.

Marcel Chu, Director, Marketing Communications, H+K Shanghai and Maggie Jiang, Director, Marketing Communications, H+K Beijing

Photocredit:1000 Words / Shutterstock.com

To celebrate the Blu-ray and DVD release of The Grand Budapest Hotel, our Twentieth Century Fox Home Entertainment team worked with nine model builders to create the iconic European hotel from the film entirely out of Lego bricks, which took 3 months and over 50,000 Legos to complete. The final model weighed approximately 150 pounds and stands 7 feet tall and 6.5 feet wide. The replica is on display at the A+D Museum in Los Angeles until August 31. ​

 

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