BEIJING: Luxury brands targeting Chinese consumers are having to reassess their pricing strategies and product mix according to new research which indicates these shoppers are becoming increasingly shrewd in their buying habits.
Data from the latest Outbound Tourism Survey carried out by FT Confidential Research, a research service from the Financial Times, highlighted a 5.6 percentage point increase to 25.6% from 2015 to 2016 in the proportion of Chinese travellers buying Chanel products – a shift it linked to a decision the French luxury brand had taken in March 2015 to cut prices by up to 22%.
That was a significantly greater uplift than other brands – including Coach, Hermès, Burberry and Fendi – which had also seen more overseas Chinese tourists choosing them. And there was a near eight percentage point rise to 26.1% among millennials choosing Chanel.
"Chinese consumers are no longer willing to pay any price for luxury and do not see price as the sole measure of prestige," according to Richard Wells, an editor at FT Confidential Research.
Management consulting firm Oliver Wyman reported similar findings from its Chinese Travellers survey, with range and price the top criteria in choosing a shopping channel – departments stores/malls and airport retail outlets are popular – while "the most important reasons when making a purchase are product authenticity and price".
Despite the multiple challenges the luxury market is facing – slower economic growth, a crackdown on corruption and gifting, a growing preference for experiences over products – "brand appeal is still strong", said Jacques Penhirin, managing director of Oliver Wyman, Greater China.
He suggested that buyers are now more mature, more informed and more interested in buying items that are personal signifiers as they are no longer simply "buying the ultimate logo" as a gift for someone else.
Data sourced from Financial Times, China Daily; additional content by Warc staff