Luxury habits evolve in China

10 May 2011

BEIJING: Emotional drivers, digital media and "connoisseurship" are increasingly shaping luxury purchases in China, a study has revealed.

Consultancy KPMG and research firm TNS surveyed 1,200 middle class shoppers aged 20-45 years old from 24 cities in the country.

Respondents in Tier 1 areas like Beijing and Shanghai boasted minimum monthly salaries of 7,500 yuan ($1,154; €809; £709), reaching 5,500 yuan across smaller metropolitan centres.

The typical contributor could name 57 luxury brands, up from 45 in 2010, and hitting 61 in Tier 1 markets.

Just 21% agreed these goods should be "niche" and "known only to a few", and 40% thought being well-known signified a range's success.

Moreover, a further 64% outlined a willingness to pay a premium if a label was popular and generated widespread awareness.

A majority of participants concurred that people owning top-quality lines "enjoyed a high quality life", standing at around 45% for indicating achievement.

Nearly 40% believed possessing exclusive items demonstrated good taste, while less than 20% of panellists said buying high-end products was akin to "showing off", down almost 5% year on year.

In identifying the broad motivation for acquiring such merchandise, factors linked to "self-reward" registered 26%, a figure rising from 21% in 2008.

Totals hit 18% and 8% in turn for "connoisseurship", measured against drops from 26% to 22% concerning expressions of "individuality", and a 13 percentage point slide, to 33%, for displaying status.

Expensive wine led among the segments claiming the highest penetration rate, on 62%, with bespoke jewellery scoring 53%, luxury watches 48%, art and calligraphy 21%, and antique or unique furniture 19%.

When it comes to experiences, 43% visited the best hotels and resorts, 31% partook of overseas travel, 30% snapped up spa or beauty treatments, and 25% had joined a yoga or gym membership programme.

Looking ahead, travel, art and calligraphy, furniture, spas and beauty centres, custom-made jewellery and watches are all set to see growth in demand topping 100% in 2011.

Elsewhere, 30% of interviewees searched the web for luxury brands more than once a week, 12% did so on a fortnightly basis, and 27% engaged in this activity monthly.

Despite this, a limited 6% minority would be "very interested" in purchasing such goods through the same channel, and another 16% were "somewhat interested" in so doing.

The main perceived benefits included 79% expecting a better deal, 67% hoping to easily compare product details, and 56% citing the fact the internet saves time.

In evaluating marketing techniques, sponsorship and events were viewed as the most effective tools for improving key brand metrics, a field where digital lagged behind.

French and Italian operators were dominant in terms of category associations, with indigenous offerings taking a sole lead for alcohol, not least due to the popularity of local speciality baijiu.

Indeed, exactly 50% of the sample predicted Chinese brands may "take off" in the alcoholic drinks sector, falling to 46% for arts and crafts, and 42% regarding jewellery.

Ratings fell to 26% for cars, 25% relating to watches, 19% discussing apparel, 18% in assessing cosmetics, 17% for bags, and 13% upon appraising footwear brands' prospects.

"Brands rooted in Chinese elements are gaining international recognition but are also sought after by Chinese customers," said Sandy Chen, research director at TNS.

"Chinese luxury companies do possess a great opportunity to win the heart and mind of the Chinese consumers, especially when traditional Chinese elements are smartly blended with modern technology and marketing."

Data sourced from KPMG; additional content by Warc staff