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China is Back in the luxury game

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According to the study “China Luxury Demand Momentumby our company Contactlab and Exane BNP Paribas, China represents 16 percent of the worldwide luxury market. The percentage is almost doubled by the number of Chinese Luxury Customers (local shopping + chinese customer shopping abroad) representing the 30% of worldwide fashion and luxury market. The study also revealed that the domestic luxury market grew 10 percent in 2016 whilst foreign shopping remained flat. A gradual shift of Chinese luxury shopping from foreign to domestic is a confirmed trend since 2014.

This means that China will play a considerable role in the worldwide luxury market in the forthcoming years, according to our forecast for 2017. As the buying power of the domestic Chinese market increases, some global brands are upping their game by adapting their marketing and customer engagement strategies to meet these preferences. Over the next couple of years, the value for global luxury brands will be sizable if they can get their digital engagement right in China.

Ecommerce penetration in China is about 7-8%, similar to the level in western markets. Looking at the market from this point of view, it is surprising that leading global brands, including Hermes, Louis Vuitton and Gucci, still have no direct ecommerce offering in China.

In our infographic we highlighted some market figures and key findings of this report:

Chinese Luxury Market

As our Digital Competitive Map China made with Exane BNP Paribas highlights, in the country some international brands are mirroring Chinese e-tailers. Brands such as Coach are creating a range of digital touch points, including localised content on WeChat, customer reviews on products, and are offering multiple delivery options.

In contrast, most of the European luxury brands are falling behind in cross channel services and in guaranteeing a personalized shopping experience. A key finding is that global brands are not exploiting WeChat, a crucial engagement tool. Out of 34 luxury brands examined in “China Online Boom: yet to come for Ostrich Luxury Brands, only Cartier utilises the platform for full ecommerce purposes, despite the importance of the platform to Chinese consumers. Others such as Chanel and Dior have used the platform for temporary stores selling single items.

The report also looks at a younger and more sophisticated demographic of shoppers: their digital consumption habits, such as their affinity for mobile retail, are reshaping the region’s luxury landscape. The researchers highlighted that the expectations of Chinese customers for a personalized luxury online shopping experience include features such as online chat assistance, standard delivery in 1-2 days, and a full spectrum of digital payment methods, such as Alipay and ‘cash on delivery’.

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Fashion & Luxury Engagement Insights by Contactlab is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at http://www.fashion-insights.com