COVID-19 is already creating a realignment of consumers’ values and viewpoints in China, where medicines, face masks and alcohol hand cleansers are now the must-have items.
But, as Jing Daily reports, while many brands’ profits are taking a pummelling, the luxury sector may find the post-virus market in China is very different. Brands may be hopeful Chinese consumers will return to luxury, but it points out that this assumption is questionable.
The Chinese consumer has discovered new realities – many people are discussing online how quarantine, for example, has made them re-evaluate the simpler pleasures in life, like friends and loved ones. Escaping unchecked consumption has helped people to reconnect.
Jing Daily also notes that even before the crisis, the more wealthy had started to move away from conspicuous consumption and were developing a more balanced view of consumerism. The crisis, once it has passed, could well speed up this process.
Ten years after the economic crisis, consumers in the US and UK still show a strong preference for a bargain or a great deal; so it’s hardly far-fetched to imagine the current health crisis will bring about what may prove to be profound changes in Chinese consumers’ attitudes, with luxury paying a high price.
Thrift was already on the rise in China because of rising inflation – National Bureau of Statistics’ data show consumer price inflation was up 2.9% on the year before, and some food prices have doubled.
Even before COVID-19 took hold, there was evidence the Chinese luxury market was maturing, Jing Daily says, and big spending was on the decline. On top of that, the newest consumer generation tends to align more with Western values and is less affected purely by logos and brands; instead, it is intent on making a “conscious effort to connect with the world and find real purpose”.
However, consumers belonging to what Jing Daily calls the “aspirational class” in second- and third-tier cities will still be drawn to big-name luxury brands. The more sophisticated consumer, though, will find more subtle methods of signaling status and affluence – a move towards the more Western-influenced phenomenon of “responsible” luxury.
There is also a growing recognition in China of the tensions in society caused by the gulf between rich and poor, making the flaunting of wealth inappropriate, it argues.
Sourced from Jing Daily; additional content by WARC staff