China continues to be an attractive foreign market for Western brands to do business in 2021, given the nation’s penchant for global luxury, lifestyle, fashion and accessories and beauty products, among many other categories.
In 2021, ever-changing consumer tastes, coupled with the recent impact of Covid-19, has made China a challenging retail landscape for foreign brands to navigate, as consumers adapt the way they like to shop and look to buy different products.
According to Bluebell Group’s recently released ‘Asia Lifestyle Consumer Profile’ report, Chinese consumers are the most optimistic in Asia, and are on the lookout for new things and digital experiences. Chinese shoppers want natural products and better health, and in relation to this, seem to pay less attention to global issues like sustainability.
By the same token, Chinese shoppers are relatively inward-looking in terms of their choices for brands and products and maintain a traditional view of luxury when it comes to brand reputation and making purchases for themselves and others. Social media is also the largest channel of influence on Chinese shoppers in a post-Covid era.
Read on for a complete diagnosis of the new Chinese consumer in 2021.
The Future Is Bright
In a post-Covid climate, Chinese shoppers are incredibly optimistic. 97 percent of Chinese consumers surveyed by Bluebell said they maintain a positive outlook about the future, thanks to a short lockdown during Covid-19, and a high public approval of the nation’s pandemic-related measure.
In relation to future spending, caution is relatively low in China compared with other Asian markets, with just 58 percent of Chinese respondents saying that they may not spend as care-free in a post-Covid world compared to pre-pandemic world.
During Covid-19, China itself was the only travel retail destination for locals, with areas like Hainan increasing in popularity with pandemic-related border closures.
Hainan or China’s Hawaii is a local island province in China that has become a popular destination for Chinese shoppers who used to travel overseas – to neighbouring luxury Hong Kong and as far as Europe – before the pandemic to buy luxury goods.
Most recently, revenues at nine duty-free shops in Hainan during the Golden Week holiday in October increased 75 percent on last year, totalling some US$252.3 million.
Chinese shoppers travelling to Hainan are seeking a retail experience in exchange for their patronage, meaning luxury houses and international brands must look to capitalise on the Hainan tourist shopping trend, providing unique experiences and offering products that Chinese consumers cannot get in their own cities.
“China’s luxury travellers are looking for an unforgettable experience, and brands are stepping up. This is an important part of the winning plan in Hainan, not just to help escape or mitigate the focus on discounts, but also to build the prestige and image of the brand nationwide.” said Rob Robertson, Beauty Director of Bluebell China.
One of the ways brands are achieving this is through pop-up events in luxury hotels, with national KOL and KOC engagement and local DFO support, Robertson notes. “The Dior pop-up event in Sanya Edition this mid-Summer was absolutely fantastic, with branding even extending to the bottom of the swimming pool. Consumers were delighted, as shown by the plentiful social media content generated by the activation.”
When deciding what to buy across most categories, Chinese consumers are social butterflies. In the fashion, skincare, accessories and footwear categories, social media is the most popular channel of influence for Chinese consumers, followed by e-commerce sites (#2), a brand’s website (#3), recommendations from friends and family (#4), and in-store environments (#5).
The active lifestyle category is also heavily influenced by social media (#1), followed by a brand’s official website (#2), e-commerce websites (#3), family and friends’ recommendations (#4) and in-store environments (#5).
Chinese consumers are avid ‘Culturalists’ or consumers that are more interested in brands that are immersed in the culture of their country. Astonishingly, 95 percent of Chinese consumers surveyed by Bluebell said they value brands which show local relevance and authenticity in their branding and product offering, making a Western brand’s understanding of local culture in China very important.
The Culturalist persona reflects the rise in the current ‘China Chic’ or ‘Guochao’ trend. Steeped in cultural nostalgia and national patriotism, the Guochao is largely driven by Millennials (born between 1980-95) and Generation Z (born between 1995-2010), and sees consumer preferences lean towards domestic brands and products that often incorporate Chinese traditional culture and style.
Source: Bluebell GroupThe trend is strong in the beauty segment, according to Bluebell, with 89 percent of Chinese shoppers most likely to purchase beauty products specifically made for Chinese skin and lifestyle, over foreign-owned ones. Japanese beauty products are the second most popular choice, followed by Korean beauty.
In targeting Chinese shoppers and the Guochao, foreign brands must work hard to understand cultural loyalty better and adapt accordingly.
More specifically, cultural appreciation needs to be authentic. Western brands today continue to recruit stereotypical Asian talent as ambassadors or collaborators, without much thought as to why they are engaging such talent and how the partnership will be perceived.
This can do a disservice to the brand and its image, if consumers perceive the move as ticking a cultural box and not truly inviting Chinese culture into their brand.
One way to counteract that might be to cooperate with local Chinese brands directly, gleaning from the cultural knowledge of these native brands and tapping the trust these brands already have with Chinese consumers.
While Chinese consumers are strong ‘Culturalists’, the Bluebell study also revealed an equally important trait among Chinese shoppers: the ‘Traditionalist’ trait, especially when it comes to luxury and premium lifestyle products.
Traditionalist shoppers in China use reputable luxury goods to affirm their status, both personally and with their friends and family. So much so that 95 percent of Chinese shoppers surveyed brand reputation is important when considering a purchase and 94 percent said they purchase luxury as a reward for themselves.
Because status comes via perceived brand reputation, new niche brands, particularly in the luxury segment, fail to qualify as luxury for most Chinese consumers. Only 55 percent of Chinese shoppers perceive niche brands as the new luxury.
There is one product category that does defy the typical Traditionalist perspective of luxury in China: fragrance. More Chinese shoppers (69 percent) are interested in exploring niche fragrance brands, with niche brands like Swedish perfumer, Byredo, a popular choice among those surveyed.
Comfort is King
One of the biggest Chinese trends to emerge post-Covid is health and lifestyle awareness and the desire for natural products, coupled with a need to create comfort in the home and indulge in personal pampering.
85 percent of Chinese consumers intend to spend more on premium brands moving forward, to spoil themselves following lockdowns relating to Covid-19. This includes gourmet food items and ‘home spa’ items, designed to treat oneself in the home.
Health is big on the agenda for Chinese consumers. 96 percent of those surveyed said they have a strong interest in products associated with a healthy and active lifestyle, with 95 percent of Chinese shoppers seeking ‘natural’ brands — from natural ingredients in skincare and beauty, to natural fibres in clothing fabric. Interestingly, sustainability is not a priority when choosing a brand, with just 72 percent looking for eco-conscious branding when shopping.
All Things New
In China, there is a burgeoning desire for virtual products. Strong ‘Neophilists’, 85 percent of Chinese shoppers said they are very interested in exploring a brand that is developing virtual products as part of their product offering.
Meanwhile, new premium goods remain intrinsic to Chinese shopping as vintage or second-hand products remain less desirable. Only 57 percent of shoppers said they like the idea of shopping for used premium fashion and accessories, once again highlighting China’s ‘Traditionalist’ view of luxury, reputation and status when purchasing goods.
While Chinese product preferences are changing, the retail landscape and how shoppers are consuming is also on the move. In summary, Chinese shoppers want it all, and brands need to adopt an experiential retail strategy to engage shoppers both in-store and digitally.
While shopping, 94 percent of Chinese shoppers have a strong interest in brands offering experiences through events, technology, entertainment and gaming elements. In-store, 92 percent of Chinese shoppers are looking for digital experiences, ranging from augmented reality-enabled mirrors to self-checkouts and online catalogues. Human connection is almost as important in-store, with 86 percent of Chinese shoppers preferring to have sales associates assist them in the purchasing process.
Recommending products that suit individual needs, offering advice and running through product information and features being the main value add-ons with in-store customer service, the survey revealed.
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*Retail in Asia is part of the Bluebell Group.