BEIJING: The target audience for luxury brands in China tends to be much younger than in areas like the US and Europe, posing a range of challenges to premium brands seeking to make inroads in this vital market.
Bain & Co, the consultancy, has forecast that global luxury sales will decline by 8% this year, to €153 billion ($228bn; £136bn), including decreases of 16% in the Americas, 8% in Europe, and 10% in Japan.
However, conditions are expected to be markedly different in the world's most populous nation, where revenues will rise by 12%, to €6.6bn, with Asia as a whole enjoying an uptick of 10% overall.
It is estimated that the average Chinese consumer with a net worth of at least $150 million is 50 years old, measured against a comparative figure of 65 years old in the US and UK.
This is according to Rupert Hoogewerf, who works on the Hurun Report, a publication providing a regular insight into the preferences and behaviours of "high net worth individuals" in the fast-growing economy.
Similarly, the typical shopper with a value of at least $15m is 43 years old, while the 825,000 Chinese possessing more than $1.5m are around 39 years old, some 11 years the junior of their counterparts in Europe and America.
"Much of this wealth has only been created since the 1980s – in other words, a solid generation later than in Hong Kong or Taiwan," said Hoogewerf.
"You'd have to look back to the late nineteenth century in the United States, or to the industrial revolution in Britain, to find anything comparable to the wave of entrepreneurs who are now starting up in China."
In light of these trends, it is essential to adopt bespoke, localised strategies, as the demands of this cohort are markedly different than those witnessed elsewhere.
"A lot of Western brands are trying to apply the same model in China as they have back home, and are thus potentially targeting too old a group, when really they need to be more youthful and dynamic to attract these sorts of people," added Hoogewerf.
Another factor which must be considered is the substantial variations observable in the country, according to Claudia D'Arpizio, a category specialist at Bain & Co.
"Companies need to have a completely different merchandising plan for different parts of the country," she argued, as, for example, Shanghai favours more formal business wear, whereas more central areas dress more casually.
Ermenegildo Zegna, the high-end Italian menswear brand, recently opened a 7,300 square-foot store in Hong Kong, with a particular focus of younger consumers.
"Asia has an incredible thirst for fashion and quality; the region is very important for us," Gildo Zegna, its chief executive, said. "Greater China has been our fastest-growing market for the past three years."
The key to succeeding in this latter region, he argued, is to track the specific needs of consumers, rather than exporting tried-and-tested approaches.
"You have to constantly fine-tune," Zegna stated. "We've become much more scientific and analytical. We seek constant feedback from the customer, and monitor how particular items are doing."
Data sourced from New York Times; additional content by Warc staff