FASHION AND LUXURY BRANDS
CHINA’S APPETITE FOR WESTERN PRODUCTS
Just as Chinese consumers like to buy online, they love to buy Western products. Western brands are generally perceived as better and safer. According to one study, 61% of Chinese consumers would pay more for products manufactured in Europe the United States and other countries. In some product categories, the preference is even higher. The World Luxury Association revealed that 86% of Chinese consumers refused to buy luxury goods labeled “Made in China”.
THE YOUNG AND WEALTHY ARE DRIVING FASHION AND LUXURY
China now accounts for a third of global luxury spending, with these figures driven by growing ecommerce sales in lower-tier cities. Younger generations like Gen Z (aged 16-22) are key to the growth of China’s luxury market. In the past month alone, 42% of affluent Gen Zs in China have purchased clothes online – more than any other age group and 39% more likely than the average internet user.
Collectively, this young, affluent audience has the potential to shape which brands deserve their (and others’) loyalty, making for powerful advocates in online spaces. It’s no wonder then that around 2 in 5 of this group in China turn to social media for product research. Additionally, close to 3 in 4 affluent Gen Z's in China posted a review online in the past month, 1.2x the average internet user. This not only highlights just how vocal they are when it comes to brands, but it reinforces the importance of social platforms in their purchase journey.
YOUR FASHION & LUXURY BRAND WILL FAIL WITHOUT GEN-Z CUSTOMERS
Around ten percent of luxury purchases worldwide are made by Generation Z, but that share is significantly higher in China — around 15 percent already. Remember, this is the market average, which includes brands that are not or barely relevant to the target group. That means the best brands already get up to 20 percent of Gen-Z customers today. So, if your share is below that, rigorous action plans are needed.
So why is it that people are disrespectful — even dismissive — to this upcoming generation? Why are they so drastically underestimated? And why is this attitude endangering the future of many brands? The answer to these questions lies in the way Gen Zers grew up. You see, they belong to the first generation of digital natives who grew up with smartphones and social media.
No previous generation had ever grown up so digitally, connected through devices, overwhelmed with data: information, tutorials, or advice. Nor have any had such transparency with brands, companies, and influencers or grew up with so much wealth, stability, and education. And none have grown up witnessing the effects of global warming firsthand or understand how animals and the environment are desecrated for the sake of fashion.
As a result, brands find many Gen-Z traits challenging: They are extremely smart, question everything, and look for real value. They do their homework before choosing a brand, and they want to make sure that brands are taking sustainability seriously. But, they are also very optimistic — especially in China — because they did not witness the hardships of previous generations and feel like they can positively shape their futures.
Since they grew up in a globalized world, they value local traditions and local talent. They are more patriotic than any generation before and like to support homegrown businesses. They know that digital interactions don’t have the same level of emotion as human connections, so they look for even more feeling in their real-world experiences than any generation before them.
But perhaps the most critical trait brands must understand about Gen Zers is that they are looking for extreme value in their purchases and the services. It’s not enough to own a famous brand and a shiny object. They will scrutinize the multiple values a brand can offer and will judge it by the total overall experience they receive. And if there is too little perceived value? They drop it and move on — fast. And when they move on, they don’t come back.
Brands can approach this shift from two angles: They can choose to wait and see, gradually adapt, and become irrelevant within a few years. Or they can switch gears and ask themselves how they can immediately become relevant to Gen Z. That does not mean losing your brand identity. It probably means developing a real rational and emotional identity for the first time. Do that, and your customers will be wowed by your phenomenal luxury experiences.
Today, Chinese consumers are looking for more innovation, product customization, high product value. Preferences are shifting from products with over-exposure of the logo to products of the highest quality. From this point of view, luxury and fashion brands will have to be able to transmit their value proposition to consumers in the local market.
With over 2 decades in the FASHION AND LUXURY market in China, we can put together a Strategy and Create a Niche offer for your brand that will Increase your exposure and sales significantly.