An Oliver Wyman research shows that 50 percent of the Chinese luxury accessories and fashion shoppers just entered the market in the past 12 months, and they are expected to drive more than 80 percent of market growth this year.
Among these new customers, 40 percent are below 25 years old, showing very different preferences and behaviours than the rest of the luxury shoppers.
The consultancy estimates there are approximately 5.4 million luxury accessories and fashion shoppers in China today. Of them, 1.5 million spend RMB 40,000 (US$6,257) or more a year, contributing 81 percent of the total spending in 2021.
With the new consumers as the key driver, luxury accessories and fashion spending in China is expected to increase 40 percent in 2021 to approximately RMB 266 billion (US$41.6 billion), according to Oliver Wyman.
“Unable to travel overseas and having money to spend, many Chinese are attracted to the idea of starting their luxury journey this year. These new customers have become the driving force of China’s luxury goods market growth in 2021,” said Imke Wouters, a Retail and Consumer Goods Partner at Oliver Wyman.
Among these new luxury shoppers, 40 percent are Gen Z (below 25 years old), and they appear very different from the other luxury shoppers. For example, Gen Z shoppers more often buy luxury items to reward themselves. They care about being unique, have a relatively higher interest in trendy seasonal items and niche brands (including Chinese niche brands), and are a lot more open to buying second-hand and vintage luxury products.
Moreover, today’s Gen Z consumers’ first luxury items are more likely to be ready-to-wear instead of a handbag or small leather goods (which were the preferred purchases of their predecessors), according to the research.
“We are not talking about a costly tweed jacket or evening gown. Instead, the younger generation would prefer a signature luxury T-shirt or other apparel items priced below RMB 10,000 (US$1,565),” explained Katie Sham, an Oliver Wyman Principal of Retail and Consumer Goods.
“They are confident with the idea of mixing and matching the luxury items with other clothing to create their unique look,” continued Sham.
Even though today’s luxury shoppers, especially Gen Z, are always online, the survey shows that offline stores continue to be important, also for Gen Z, with the luxury brand sales assistants playing a critical role. Relationship with brand sales assistants is the benefit most desired by Chinese luxury shoppers. Three out of four luxury shoppers maintain regular contacts with their sales assistants, and 60 percent of them talk to their sales assistants at least once every two weeks, either through WeChat text, voice messages, or phone calls.
“Sales assistants have become the new best friends of Chinese luxury consumers; they’re part of their everyday social life,” said Sham. As a result, 70 percent of the respondents said they had already decided on purchasing with their sales assistant before going to the store.
“Brands have to double down on recruiting and retaining sales talents, and also should think about how much autonomy they want to give to their sales assistants versus maintaining control,” added Sham.
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Oliver Wyman, a management consulting company, surveyed 3,000 Chinese luxury shoppers who spent at least RMB 40,000 (US$6,257) in the past 12 months in October 2021, supplemented by one-on-one interviews with top luxury shoppers who spent more than RMB 200,000 (US$31,284) a year. Interviews were also conducted with sales assistants from various luxury brands across different cities. The surveyed luxury goods included leather goods, ready-to-wear, accessories and fine jewellery.