Exclusivity has become a vital aspect for luxury brands as they set their sights on China’s wealthiest consumers for growth. Instead of relying heavily on the aspirational middle-class, luxury brands are now focused on the crucial 5% of luxury consumers who contribute to more than a third of sales in China. This shift comes in response to the country’s economic slowdown following the pandemic.
To cater to this exclusive clientele, luxury brands are selling fewer, but more high-value items. They are also offering special privileges such as private sales appointments, access to meet-the-designer events, and personalized experiences. Although these strategies have been employed in other markets, luxury brands are now implementing them more aggressively in China.
In the past, luxury brands primarily relied on mass events to raise brand awareness and attract new consumers. However, the changing economic landscape has forced them to adapt their approach. The property crisis and high youth unemployment have made it imperative for luxury retailers to compete for the discretionary spending of the remaining wealthier customers.
Creating a sense of importance for these very important clients (VICs) is crucial for luxury brands to engage with high-end consumers. They go to great lengths to provide intimate and exclusive experiences, such as celebrity-filled galas and private dinners with renowned designers. In addition, brands like Gucci, Chanel, and Dior have designated exclusive retail spaces in Shanghai specifically for their wealthiest clients.
Despite economic challenges, China remains a promising market for luxury brands and is projected to account for almost 40% of global luxury sales by 2030. Unlike other industries reducing their presence in China due to geopolitical tensions, many luxury companies are committed to staying and investing in the country.
While luxury brands are expanding globally, they recognize the importance of investing in their largest market. By creating a strong desire for their brand, they aim to remain the top choice for customers even during times of cost-cutting. Although China’s economic growth has slowed, even VICs like Diana Wang exercise caution with their luxury purchases. Nevertheless, luxury retailers continue to be undeterred, as buying luxury has become a habitual behavior for many affluent consumers.
In conclusion, luxury brands are adapting their strategies to cater to China’s wealthiest consumers. By offering exclusive experiences and perks, they aim to solidify their position in the market and take advantage of the country’s long-term growth potential. Despite economic challenges, luxury brands have a positive outlook for China’s luxury market and are fully committed to investing in its future.
Useful links:
1. China’s middle class has grown to a gigantic 330 million people in just over a decade
2. Five charts that reveal the mainland’s reshaped luxury market
