“Disruption and challenges: Where luxury goes next” was the topic of the 4th edition of the Luxury Symposium, held in Hong Kong on January 20. Hosted by the French Chamber of Commerce and sponsored by Tofugear, Farfetch, Hongkong Land and others, it touched on the challenges the luxury sector is facing and where it is headed. Here we summarise five themes that emerged from the event.
Chinese young affluent consumers drive luxury consumption
Chinese consumers, in particular young, upper middle class consumers, are fueling luxury consumption growth both globally and in China. By 2025, the population of Chinese affluent, young consumers will exceed those of Europe and the US combined. These consumers look for product information through social media platforms and shop through both offline and online channels. Luxury brands and retailers must not neglect the needs of these consumers as they will account for a large share of their revenues by 2025.
Considerations for brands trading on their heritage
Given the importance of Chinese consumers in the luxury market, it is important to remember that their knowledge of your brand might be limited. Luxury players looking to capitalise on their heritage should consider that shoppers in China might not even know where a brand is from. McKinsey’s Daniel Zipser gave the example that only 45% of consumers in China were aware that Canada Goose is originally a Canadian brand.
Luxury brands should embrace China’s digital landscape
China’s digital landscape is now dominated by four companies namely Baidu, Alibaba, Tencent and Bytedance (BATB), which is also where consumers spend 80% of their mobile time on a daily basis. These companies provide marketing opportunities for brands and also massive amounts of consumer insights which brands and retailers can tap into. Some luxury brands are already embracing the change, for instance Cartier launching Alibaba’s Tmall flagship store recently, and similarly Gucci and Dior setting up their own WeChat mini-programs in China.
Technology should be a tool to facilitate a good customer experience
While many brands and retailers are embracing new technologies, technology is just a tool in the end. A human touch is still valued by customers and retailers should use technology to empower human staff to provide better customer experiences. “Digital is just a part of a retailer’s tool belt, it helps make things run smoother but does not become a great customer experience on its own,” said Tofugear CEO Carson McKelvey.
Lessons on localising content and experience building from Farfetch
Farfetch, a London-based online luxury fashion retail platform, is adopting tactics such as localised storytelling to cater to the specific needs of Chinese fashion consumers. Farfetch found that the edgy content created by its staff based in London’s Shoreditch district was not resonating with shoppers in China. It now exclusively uses a local team in Shanghai to create its content to ensure it aligns with the needs of this market.
Farfetch also launched its Private Client Program in China, with its private client status offering early access to fashion collections and exclusive merchandise as well as meet and greets with fashion designers. These VIPS only make up 1% of its customer base in China, but account for 20% of revenues and act as influencers on others.