As many companies experience a slowdown in China, luxury brands are surely smiling as they look at their sales performance.
Last week, LVMH – the world’s largest luxury group, which includes brands like Louis Vuitton, Dior, and Moet & Chandon – surprised everyone by announcing an increase in sales during its fourth quarter earnings, and an 18 per cent increase in net profit on 2017.
What can they thank for that? Mostly sales of expensive fashion items and handbags.
This change in Chinese spending habits is down to a number of factors. Of course there’s economic growth, but it’s also due to increased brand awareness, the rise in mobile payments, and a growing taste for quality.
The luxury market is on the up, particularly in the 18-35 age group, which made $1.5 trillion worth of purchases in 2016 – up from $700bn in 2011.
China is an exciting place to watch right now. We started there as a private members’ concierge business, and now 20 per cent of our global membership is in Asia. We are seeing a big increase in Chinese high-net-worth customers looking for lifestyle services – and their tastes are changing.
While tangible luxury products are still the driving force behind growth, we are seeing a more thoughtful approach to luxury spending among the emergent Chinese middle-class as their wealth continues to rise.
They are increasingly looking for more than just well-known brands; they want meaningful experiences where they can learn about the history of a brand and be educated about it.
They also want what others can’t have. One of our biggest growth areas is bypassing waiting lists for luxury goods that never hit the market, and sourcing rare gifts.
Purchasing power in China is increasing rapidly, and there is a taste for bespoke and personalised items to set them apart from the “collective”. Along with an improved standard of living comes an increased awareness of brands, and this has also influenced sales.
I have seen more and more brands hosting catwalk shows or using celebrity endorsements and releasing limited edition items – for example Miu Miu, Tommy Hilfiger and Michael Kors, which partnered with Chinese actress Yang Mi to launch a limited edition purse.
High-end fashion, luxury, cars and jewellery are all highly covetable, so we will start to see more retailers in this sphere launching physical stores and e-commerce sites in the next few years.
Other than the acquisition of luxury goods, our Chinese clientele differ from western counterparts when it comes to their growing focus on education consultation and investment property sourcing abroad, as well as looking for the best healthcare providers in the world.
On Tuesday, people all over the world celebrated Chinese New Year and ushered in the year of the pig.
While the country’s economic slowdown has sparked concerns in recent months, if you’re in the luxury business and have a bespoke offering to make you stand out from the crowd, you’ll find consumers in China prepared to pay for it.