China’s concept of luxury has changed. The Chinese had once bought luxury to signify wealth and social status, but in a country that brought millions out of poverty in less than three decades, consumers have evolved quickly and are now expecting luxury brands to connect with them on both functional and emotional levels. Today, besides providing an exceptionally crafted product that may be elegant, exclusive and encourages self-expression, luxury brands have to add value to consumers’ lifestyles and offer meaning on a deeper level too.
To address this consumer need, luxury brands are crossing over to provide consumers with an all-round luxury experience.. Branded lifestyle experiences, created for the affluent Chinese have extended luxury brand philosophies into new waters.
Last year, Armani launched its art residence by Armani/Casa in Chengdu with Chen Dong, Chairman of Mind Group commenting, “A brand new artistic world icon will be created that combines both the profound sense of Chinese culture represented by Mind Group, and the world class avant-garde fashion philosophy of the Armani Group.”
Bvlgari are another example of this trend and will open luxury hotels in Shanghai and Beijing by 2017 with Versace following with the launch of Versace Residences in Chengdu It is clear that travel presents a new growth market for brands targeting both Chinese consumers and tourism.
In a 2014 report by Bain, 55% of the surveyed Chinese consumers have stayed in a luxury hotel/resort before, along with 36% investing in spent for luxury spa and 28% on high-end travels. More consumers are increasing their spend on luxury experience consumption.
According to a consumer from Shanghai, “I’m tired of shopping trips because going overseas is not the only way to buy luxury goods nowadays. A complete lifestyle is more appealing to me, and I plan to spend more on leisure travels.”
Under the backdrop of urbanization, a report by McKinsey shows the middle class from tier 3 cities (open coastal cities with high income and significant economic development, including Beihai, Changzhou, Foshan, Guilin, Taizhou, Wenzhou and Zhongshan) will account for 31% of the total number of middle class in 2022.
A one size solution doesn’t fit all. Analysis of our own proprietary data, taken from a survey of over 10,000 consumers in the top 10% of house hold income levels reveals clear differentiation. Middle class aspirants, fashionistas, entrepreneurs or connoisseurs all have distinctly different attitudes, aspirations and patterns of behavior. And they each shape the way ‘luxury’ is consumed in China today. The combination of lifestyle aspirations and drive for meaning or connection has resulted in Chinese consumers wanting luxury on their own terms and delivered in their own way. Brands are now better placed to capture the evolving affluent Chinese luxury tastes by creating an immersive experience.
With subtle branding, discrete logo’s and provenance, all signifiers of value, the new generation of fashion leaders are also digitally connected to and shaping the latest global trends. And as middle class spending power increases, we can expect to see the rise of affordable luxury brands, with purchases driven by individuals looking to reward themselves.