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Luxury struggles with digital

News, 03 February 2017
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BEIJING: Luxury brands in the west are playing catch-up with their mainstream counterparts when it comes to leveraging digital, but they need to re-learn their approach when tackling China, a new report suggests.

A study from analysts Exane BNP Paribas and customer engagement specialists Contactlab, The Online Purchase Experience in China, noted a shift in buying patterns as China's luxury shoppers begin to buy more products domestically rather than on overseas trips.

And as more and more spending in China moves online, European luxury brands are having to follow, but many are struggling to keep up with the "lightning speed" of digital developments there, according to The Moodie Davitt report.

"The Chinese are not only the most important nationality for luxury goods but also the most digitally advanced consumer population," said Marco Pozzi, Senior Advisor at Contactlab.

"Whilst luxury brands around the world are dramatically improving their digital marketing and e-commerce customer experience, digital in China is different," he stated. "This is a market where mobile is key, delivery in 1-2 days is expected as a standard, and the social media landscape is extremely idiosyncratic."

Western brands have tended to place greater emphasis on their physical presence and the in-store experience and to rely on email for digital communication, but that is not enough to satisfy Chinese consumers.

"The expectations of Chinese consumers include online chat assistance and social elements such as brand and product reviews, as well as the option to pay via WeChat," said Pozzi.

"These elements are supported by most Chinese e-commerce operators, but European brands are not supporting these features yet," he added.

Separately, a report from real estate services company CBRE noted that luxury retailers are rethinking their approach to bricks and mortar stores, with more focus on flagship stores and the brand experience these offer rather than simply increasing the total store count.

It also predicted that a growing interest in health and fitness will see more malls restructuring their space to accommodate exercise facilities .

"Major global brands retain a strong appetite for very large retail spaces which can also host in-store training classes and events," it said.

Data sourced from The Moodie Davitt Report, Jing Daily; additional content by Warc staff

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