Global brands face new opportunities as luxury represents a powerful form of social capital for young Chinese consumers.
Set to be the engine of global spending on high-end shoes, bags, fashion, jewelry, and watches, China’s affluent upper-middle class presents an enticing prospect for the world’s designer brands. In fact, Chinese luxury spending is expected to double to 1.2 trillion renminbi by 2025, delivering 65 percent of growth in the market globally (Exhibit 1).
China’s young luxury consumers are more interested in aspiration than heritage, making it imperative for brands to modernize their stories, and launch limited-edition products to make young consumers feel they are brand VIPs. This includes fostering an atmosphere of exclusivity through an annual calendar of special events, particularly around art and fashion, while offering as many opportunities for personalized brand-consumer interaction as possible.
Savvy brands should design a go-to-market strategy that understands young Chinese consumers’ appetite for consuming media at every available touchpoint: entrusting their digital marketing teams to make quickfire decisions and encouraging them to experiment with local, emergent media favored by young consumers; balancing “media” spend beyond earned, paid, and owned marketing channels to include stores and e-commerce; offering a seamless shopping journey from overseas and domestic stores to e-commerce with distinct channel roles.
Young Chinese consumers are set to fuel the global luxury market but winning with this segment will require companies to respond quickly by adopting a savvy, consumer-first mentality.