What happened: A report released by consultancy firm Oliver Wyman predicts that the surge in the number of first-time luxury fashion buyers will trigger an 88% increase in China’s luxury fashion market in 2021.
Of the society New faces of Chinese luxury buyers report shows that the preferences of young consumers will soon reshape the industry. This cohort is significantly influencing the Chinese luxury fashion market in 2021, with 1.5 million luxury buyers now spending an average of at least $ 6,255 (40,000 yuan) each year on fashion-related luxury goods.
The report also highlights how this group was responsible for 81 percent of total industry sales over the past 12 months. “Many consumers who may have spent [money] on travel before other things, especially younger Gen Z consumers, have instead entered the luxury category, ”said Imke Wouters, retail and consumer goods partner at Oliver Wyman, at Fashion business.
Equally important, Oliver Wyman’s report points out that young adults have different buying behaviors than older generations. For example, Katie Sham, director of retail and consumer goods at Oliver Wyman, said that “99%” of Chinese luxury shoppers would have bought leather goods for the first time ten years ago. But Gen Z consumers are more inclined to buy ready-to-wear today.
“We’re not talking about an expensive jacket from Chanel or an evening dress from Dior. We’re talking about a signature t-shirt, ”added Sham.
The Jing socket: Oliver Wyman’s report exposes the massive consumer shift in China, where young consumers have stopped investing in handbags and small leather goods and are now focusing their spending on ready-to-wear items. Considering that leather accessories have traditionally been responsible for brand expansion, increased sales opportunities and revenue growth, this shift could potentially alter the industry and impact the identity of various luxury brands.
For example, heritage brands like Hermès, Louis Vuitton, and Maison Goyard are widely known for their iconic bags and leather goods. But Louis Vuitton, both under Kim Jones and Virgil Abloh, is successfully moving towards streetwear. This is not the case with Hermès and Maison Goyard. As such, Hermès should respond to this trend by generating unique products relevant to young consumers, a strategy that should strengthen customer relationships and maintain the relevance of the brand.
Look at Christian Dior, for example. The French luxury brand has gained a competitive advantage in the Chinese market by focusing on affordable designs that put gender equality and environmental issues at the forefront. His WE SHOULD ALL BE FEMINISTS T-shirt became a worldwide hit, inspiring other luxury brands to follow his example. But in the future, luxury brands will have to go beyond innovative marketing campaigns and create products that captivate audiences. A plain white T-shirt will no longer do.
The Jing socket reports on major news and presents our editorial team’s analysis of key implications for the luxury industry. In the recurring column, we analyze everything from product declines and mergers to heated debates popping up on Chinese social media.