Millennials and Generation Z shoppers in China are set to become the biggest drivers of luxury consumption by 2021 as younger people continue to spend on high-end items with excess income.
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According to the latest report by the Chinese luxury retailer Secoo and the data company Tencent, Millennials and Generation Z consumers will make up half of China’s discretionary disposable income. As it stands, some 48 percent of luxury shoppers are under 30 and account for 34 percent of the country’s disposable income.
The young ones have veered toward online shopping even more in recent years. Some 42 percent of Chinese Millennials and 34 percent of Generation Z consumers shop online, according to the report, compared to 28 percent of Baby Boomers.
In 2017, e-commerce accounted for 8 percent of total luxury sales in China, harking a 12 percent increase from 2016. The figure is forecasted to steadily rise to 13 percent by 2021, said the report.
It was also found that digitally savvy shoppers in the luxury market are seeing brands establish themselves online and widen communication channels with customers.
Digital media is already playing a key role in driving sales, with platforms such as Weibo and WeChat cited by report authors as main platforms for finding brand information on luxury labels
“Millennials and the younger Generation Z are set to change the balance of power in Chinese luxury consumption over the coming years and how brands respond to them will be important to their future success. While it is critical to engage digitally and through omnichannel services, these younger customers also want experiences that excite and speak to them as individuals, their social values and growing appetite for exclusive experiences,” said Eric Chan, Secoo’s CEO.
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China is the second biggest luxury market after the U.S. and domestic luxury consumption continues to grow in light of the country’s recent cuts on import tariffs. And more international firms and retailers want in.
Earlier this year, Farfetch secured a $397 million investment from JD.com in order to scale its business in the Chinese market. Meanwhile, fellow British luxury platform Net-A-Porter and brother site, Mr Porter, have increased VIP online shopping services in nearby Hong Kong, a city where many Chinese head to shop.