China's role in the global luxury market is becoming more significant year by year. China remains one of the brightest growth prospects in the midst of such a fragile world economy.Luxury companies are pursuing very different strategies according to the scale of their operations, and the scale of their ambitions. G & G relies on a strategic long-term approach to deliver results. We will help you:
customize a communications plan to target high net-worth consumers and influence key constituents
protect long-term brand equity by preserving the image and integrity of your product or service develop innovative strategies that tap into new market opportunities
We provide a wealth of expertise in a variety of areas, including media relations and marketing communications, to name a few. And we often integrate these disciplines with our proprietary research tools to help you achieve meaningful and measurable results.
2. Agenda
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
G&G Consulting
3. China luxury market overview
Who are the consumers?
How much did they spend on luxury goods?
Where did they purchase the luxury goods?
What luxury goods did they purchase?
Why did they purchase them?
How did the brands approach the market?
G&G Consulting
4. China’s Four Categories of Luxury Consumers
Who
Core Luxury Buyers
Affluent households that spend
between 12% and 20% of their
income on luxury goods
A total of RMB 20,000-60,000 (US$
3,000-9,000) on luxury goods
More than half of luxury consumers
G&G Consulting
5. Who Majority of growth in 2010 came from new customers
Key Highlights
New customers
Existing customers China market is supply
Total spending driven; new store openings
create new demand
“Our new stores in Tier 2/3
cities not only attract
original consumers, but
bring in many new
consumers. People in
these cities have strong
desire for luxury goods”
PR Manager, Luxury brand
EST
G&G Consulting
6. How Luxury consumption (2010)
much
Luxury consumption (2010, Euro B)
US Japan Greater Italy France Mainland UK Germany Korea ME HK Russia
China China
SOURCE: Bain - China luxury market study 2011
G&G Consulting
7. Total luxury spend by mainland Chinese reached
Where RMB212B in 2010; but >50% spent overseas
Total China luxury spend
Growth
(RMB B) (09-10)
1561 2117 36%
Overseas Overseas
38%
378 522
HK&MC HK&MC
500 45%
724
Mainland Mainland
27%
China China
684 871
SOURCE: Bain - China luxury market study 2011
G&G Consulting
8. Strong growth, increased by 27% across all luxury
What categories. In each luxury category, the top 5 brands
account for >50% of sales
2010 China domestic luxury spend (RMB B) Total = RMB 87B
Watches Suitcases &
Cosmetics, perfume Menswe Shoes Other
& personal care handbags ar Jewelry Women swear
Top 5 brands by category in alphabetical order
SOURCE: Bain - China luxury market study 2011
G&G Consulting
9. “Internationally well-known brand” has become
Why one of the top buying factors with “superior
craftsmanship” continuing to be the most important
G&G Consulting
10. Motivators: Emotive factors , status-seeking and
Why needs based factors emerged as key drivers
SOURCE: KPMG - Luxury experience in China
G&G Consulting
11. Agenda
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
G&G Consulting
12. 5 key trends in China luxury market
Consumers expect comprehensive and differentiated
services
Tier 2/3 cities continues to be the “new” battleground
Continued importance of online platforms
Increasing brand building efforts, and more localized
Increasing gifting, and more diversified
G&G Consulting
13. Chinese consumers are becoming more sophisticated, and
1 demanding better service experience
Key Highlights
Rising awareness of
brands and prices
Less flash, more
understatement
More sophisticated and
demanding better service
experience
G&G Consulting
14. Plotting your retail footprint:
2
Tier 2/3 cities continue to be the “new” battleground
Key Highlights
Stores opening from 2008
Tier 1 cities
Tier 2 cities Proliferation of real
Tier 3 cities estate development in
Tier 2/3 cities
Consumer’s attitudes in
Tier 2/3 cities towards
luxury and wealth similar
to Tier 1
However, talent storage
and rising labor costs
are hurdles fro growth in
Tier 2/ 3 cities
Stores by the end of Sep 2011
G&G Consulting
15. More and more brands employ social media as an ecommerce
3 channel, inspiring customer's desire to purchase and build
image
“Which channels of internet do you
normally get information on
luxury goods?”
Burberry - kaixin Coach - Renren
Social media* News portal Video portal
Bottega Veneta
- Weibo Sina
Social media includes: SNS, weibo and blog
Lancôme -
iPhone apps LV - Jiepang
G&G Consulting
16. 3 Internet continues to serve as an important marketing
channel in China for luxury brands
Key Highlights
Internet is approaching
magazines as a key
information source for
consumers of luxury
brands
Brands invest to provide
engaging consumer
experience through their
China website to promote
brand heritage and culture
G&G Consulting
17. 4
More localized marketing
efforts in 2010, including
social and non-profit
activities
Brands tried to link themselves
with China in marketing
campaigns…
Luxury brands continue to
actively organize charity events
G&G Consulting
18. Gifting remains significant; cash cards enable diversification
5 and drive brands to increase desirability
“What % of the luxury goods you’ve Key Highlights
purchased is for gifting? Own
consumption? Banks launch ExpressPay Cards as gifting
card:
Anonymous, different face values
Gifting Can be used domestically ad
overseas in retailers that accept
UnionPay
However, can’t be recharged or used
in ATM
Own Other service companies such as shopping
malls also launched anonymous shopping
cards
These cards are increasingly used for
gifting:
Gift receivers have more freedom to
choose the brands/products that
they want G&G Consulting
19. Agenda
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
G&G Consulting
20. Who Where
• Tier 2/3 cities, in addition to • Educate consumers in
Tier 1 mainland, get returns in the
• Could be educated How Greater China and overseas
• New customers strategy much
Massive market,
Why
What still growing
• Brand, craftsmanship
• Potential in all luxury
• Innovation design
categories
• Self-reward & individuality
• Top 5 in each category counts
as motivators provide new
opportunities
G&G Consulting
21. Implications for luxury brands in China
Strategic approach Winning way
Position in the right category & • positioning
Own the share of mind and share • Systematic brand awareness
of voice in the specific category building
• Digital strategy
Make it available • Diversified channels
Increase consumers' loyalty • Wonderful buying journey
• CRM
G&G Consulting
22. Implications for luxury brands in China
Main challenges ahead Implications for luxury brands
Increasingly crowded market; Increase brand equity investment and
Brand several brands with undifferentiated differentiation
image in the eyes of Chinese consumers; Enhance the personality of the brand through
Building
local events & social / non-profit activities
some brands are even not awarded
Ecommerce of luxury goods is at the Identify influential bloggers and educate them
emerging stage; about the brand
Digital
models of the operation vary Work with a social media agency to monitor
Strategy and react to online conversations
Craft brand's e-commerce presence
Chinese consumers expect to experience Build / enhance service facilities and
Exceptional superior service in China capabilities in China to cope with overall
Service Chinese purchases, not just domestic
More sophisticated Chinese consumers Build / enhance CRM systems to manage
expect to be recognized and served Chinese consumer base globally
CRM equally well everywhere
G&G Consulting
