Worldwide spending on luxury products keeps on ticking. Yet, the leading marketplace for luxury products among young adults is not the United States or Europe. But China! And by a wide margin. Therefore, we look at understanding the young Chinese luxury consumer.
Today’s discussion adds to our previous coverage on the changing global marketplace. For example, see Worldwide Quest for Change. 2018 Global Most Valuable Brands. The State of Global Fashion.
Key Market Segment: Understanding the Young Chinese Luxury Consumer
The dominance of Chinese consumers for luxury is astounding. And especially so for the young adult luxury consumers. A recent McKinsey & Company study bears this out. As Lan Luan, Aimee Kim, and Daniel Zipser report:
“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. Thereby delivering 65 percent of growth in the market globally. Young Chinese consumers view ownership and affiliation with designer brands as a form of social capital, not just something to wear, but a lifestyle choice that marks them as part of a distinct and exclusive community.”
“Research for the China Luxury Report 2019 also shows that the majority of these young consumers are fresh to the market. This presents both a tantalizing opportunity and an implicit imperative for brands to stay current, or risk losing out to more digitally savvy rivals. Furthermore, while some Chinese fashion houses excel at various aspects of online marketing and commerce. Yet, even China’s most popular luxury brands have yet to establish a comprehensive presence across the digital ecosystem. Consequently, opportunity abounds as brands seek to engage the attention of consumers in the world’s most lucrative and fastest-growing luxury market.”
Finally, check out the following McKinsey video that sums things up on this topic.
I think one of the reasons that young Chinese consumers are enthusiastic into luxury goods is because most of them are the result of ‘one child policy’, which means that the whole family, including their parents and even grandparents are making every effort to support this child in every aspect, including financial support of course. Meanwhile, China’s social media system is also very mature, that there are so many celebrities and social media influencers out there to advertise products. Being immersed in such an environment, people are willing to mimic such lifestyle and purchasing choice, and since luxury goods are affordable under family support, it becomes a habit. I firmly believe the Chinese luxury market is very potential and will grow in a high speed in recent 5 years.