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Luxury shopping in China less about logos and more about fashion and women

By Lu Nengneng | December 17, 2013, Tuesday | Online Edition

LUXURY shopping in China, once known for its obsession with logos, is becoming more fashion-centered with consumers growing more sophisticated and women playing a more prominent buying role, the 2013 China Luxury Goods Market Study released by consulting firm Bain & Company this week says. 

The shifts come after the government’s anti-extravagance and anti-corruption campaigns dampened the sales growth of menswear and luxury watches, which are traditional gift-giving categories.

Against the backdrop of moderate, 2 percent luxury consumption growth on China’s mainland, menswear shifted from strong growth of 12 percent in 2012 to a 1 percent decline. Sales of watches, which account for over one-fifth of total luxury shopping, are expected to drop 11 percent this year, deteriorating from last year’s 5 percent decline, with highly priced models experiencing the most drastic downward trend.  

By comparison, cosmetics, perfume and personal care — the mainstay of China’s luxury market, driven by relatively inelastic demand — is expected to post a moderated but still healthy growth of 10 percent compared with last year’s 15 percent. Shoes and women’s apparel showed strong momentum, growing 8 percent and 10 percent respectively from their small bases. The two segments together are expected to make up just 11 percent of China’s luxury shopping this year.

“Much of this performance stems from women’s increasing sophistication and influence, which has driven men’s and women’s shares of luxury spending in China to equal levels in 2013, a rapid evolution from a starting point of over 90 percent spending by men in 1995,” Bain & Company said in a report.

And this is not the only major shift that luxury brands should be preparing for. The diversifying consumer base requires them to be more nuanced in their approach to shoppers than ever before, the firm noted.

It divides luxury consumers into four main categories according to their consumption level from low to high: the aspirant looking to stand out from the crowd, the fashion addict afraid to be outdated, the nouveau riche who love logos, and the core customer who enjoys a sophisticated luxury lifestyle.

And when it comes to regional preferences, consumers in tier-1 cities tend to show their fashion tastes through personalized mix and match, not with accessories that everybody can wear, which sets them apart from the more traditional consumers in tier-2 and tier-3 cities.

“Brands have to master a broad set of management skills to succeed in China now,” said Bruno Lannes, a partner of Bain and lead author of the report. “There are three new imperatives coming from the increased sophistication of Chinese shoppers: changing focus to managing fashion lines, merchandising and inventory; tailoring customer strategies to multiple segments, and training store staff to provide the best customer experience for these diverse and increasingly more sophisticated Chinese shoppers.”

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