Companies will need to think outside the brand box to win over the hearts and wallets of China’s young luxury shoppers, according to a new report by McKinsey.

China’s luxury spending is projected to nearly double between now and 2025 to US$174.57bn and account for 40% of the global luxury market. But the nation’s younger consumers, while still brand conscious, aren’t loyal to brands in the same way that older cohorts are.

“They’re more willing to venture beyond them [brands] for new luxury experiences and tend to churn through them more quickly than older, more loyal consumers do,” McKinsey noted.

Luxury companies will need “the right mix of incentives to get young consumers to try a new brand” with a premium on renewed and refreshed product lines and marketing that “creates an aura of novelty”, it added.

The management consulting firm observed that across China’s post-1980s and post-1990s generations, there are four distinct clusters of buyers: luxury newcomers care most about brands; status surfers are the least brand loyal; luxury connoisseurs, with more sophistication and higher aspirations, often are business owners with higher incomes or substantial family money; fearless young spenders shop for what’s trendy rather than branded products.

The first two of these together account for almost 70% of the young luxury market:


Source: McKinsey

The report found that 52% of post-1990s generation respondents occasionally buy luxury goods outside of preferred brands compared to 30% of the post-1980s generation.

Social influencers have helped create greater luxury discernment among younger buyers. They are heavily influenced by opinion leaders, often global or Chinese celebrities, who talk about and display their purchases on social media.

They also research extensively before buying, referencing an average of 16 information sources and spending 4-5 hours a week on luxury and fashion content. They want personalised digital experiences – from their interactions online to apps that use games to heighten engagement.

Despite their affinity for digital, nine out of ten young Chinese consumers favour in-person experiences with sales staff in brand stores when it comes to making a purchase decision.

McKinsey suggested that brands will need to reimagine in-store experiences – catering to young consumers’ desire to feel different and valued and think of the store as its own media channel.

Sourced from McKinsey; additional content by WARC staff