Last Year, Chinese People Bought 1/3 Luxury Goods All Over The World.

In April 26th, McKinsey China released the 2019 luxury goods consumption report in China based on the data of China UnionPay luxury paction data. It analyzed the different needs and performance of luxury consumption and sales in different age groups such as consumers, cities and sales promotion channels.

In 2018, the amount of luxury goods consumed by Chinese people reached 770 billion yuan, accounting for 1/3 of the total global luxury consumption. The average household expenditure on luxury goods consumption was nearly 80 thousand yuan for luxuries.

In 2012 ~2018, more than half of the global luxury market growth came from China.

By 2025, China's total consumption of luxury goods is expected to increase to RMB 1 trillion and 200 billion yuan, and its contribution to global luxury consumption growth will reach 65%.

80, the new race after 90

The younger generation represented by "80 generation" and "post-90s" accounted for 43% and 28% of the total number of luxury goods buyers, respectively, contributing 56% and 23% of the total consumption of luxury goods in China.

Most respondents and nearly 70% of the "post-90s" said they wanted to buy luxury goods to "feel unique and manifest themselves rather than vanish".

Buying luxury goods has become a way of life for them to share experiences and convey values on their online or offline friends.

For this reason, the top priority of luxury brands is to please the younger generation of China.

Whether we can understand them deeply, keep pace with them and enter their social circles decide the next ten years of life and death of the brand, and digitization is the key to please this core target group.

These young consumers are not loyal to the brand itself, but the combination of brand + explosive money.

They will not buy all kinds of products of the same brand, but will choose multiple brands to purchase the most popular and recognizable products of each brand to show their differences.

Buying luxury goods is more and more like buying cosmetics. What attracts consumers most is brand star products.

The good news for new brands who want to play a big role in the Chinese market is that consumers of all ages in China are willing to try their best.

The most open mind and the most widely visited number is "after 90".

However, consumers who are familiar with brands and heavy use of social media will not be able to impress them only by making articles on the brand.

The brand must constantly update product and product stories, customize videos, pictures, promotional soft ware and other related marketing contents to try to build every product as a buy like Hermes platinum.

For many luxury brands, high frequency innovation is a big challenge.

The solution is that in all media and social environments, all Chinese luxury consumers are affected by online and offline contacts. The key opinion leaders (KOL) have a strong influence on the Chinese young generation.

Some brands have already tried some more successful practices, including the traditional luxury goods brand, the young trend card, or the cooperation with the key opinion leaders, offering limited money, joint name, or using creative methods to launch consumer interactive games.

And the use of various levels of star and net Red Pyramid multilayer pmission, will be in different stages of the different consumers in different stages, and is conducive to the brand to reach different levels of consumers.

Taking WeChat as an example, its functions such as content publishing, consumer consultation, product trial, social sharing, online flash shop, small game and membership management form a complete ecosystem, which opens up more possibilities for brands.

Despite the acceleration of ageing in China, DanielZipser, senior director of McKinsey Global, told the first financial group that this had little impact on the growth of luxury goods sales.

For example, according to the data of mobile phones and cars, although the overall market growth is slowing down, the high-end performance is still strong, and luxury goods will maintain this trend.

The impact of social aging on luxury goods is not great, because although 80 and 90 are the main force in China's luxury market, Chinese consumers generally start buying luxury goods for a long time (half of the "post-90s" and 31% of "post-80s" luxury consumers only start buying the first luxury goods in the past year, and nearly half of the "65" and "70") are buying designer brands in the past three years.

Today's post-80s and post-90s consumers will continue to increase luxury consumption, and there will be more new young consumers joining the ranks of luxury goods.

He believes that the growth of luxury consumption is not in the harvest of the demographic dividend, but in the trend of the growth of a small number of high-income consumers. In recent years, the number of middle and upper income families with a sharp increase in the number of households in recent years will maintain an average annual compound growth rate of 28%. The monthly household income of 17450~26180 yuan (equivalent to 2600~3900 dollars) will reach 350 million of the population, and they will really bring the growth of luxury goods to the population.

Offline sales dominance can not be replaced

The report shows that when young consumers buy luxury goods, they make decisions very quickly, because they have long been "grass" by social media platforms.

Half of the post-80 and 90 respondents said they knew their products very well before they arrived at the store.

60% of the 80 and 90 respondents said that the purchase decision was completed within a week.

"After 65" and "after 70" require a longer decision to purchase, most people will make decisions in two weeks.

What is interesting is that consumers of any age group will get luxury information through various channels, including browsing luxury channel that compares the major comprehensive and vertical e-commerce platforms, but most purchases will eventually take place online.

Brand stores, advanced shopping centers, duty free shops and outlets are the main shopping places for Chinese young consumers.

The pleasure experience of luxury shopping in physical stores, such as shopping guide, professional and meticulous service, high-end shopping environment, free dessert wine consumption, membership benefits and good after-sale, is an important reason for Chinese young consumers to become repeat customers.

Respondents generally reflected that shop guide shopping played a vital role in purchasing, and personalized recommendation and quality service played a very important role in the purchase decision of the younger generation.

The report believes that offline channels will continue to dominate future luxury sales rather than e-commerce and online social shopping channels, and the composite annual growth rate of the former will reach about 6% in the next few years.

Online sales will increase by 2~3 times by 2025, equivalent to 1/8 of China's 1 trillion and 200 billion yuan luxury market.

After all, luxury stores only cover less than half of the wealthy families in China (annual income is more than 300 thousand yuan), and the top luxury brands' stores in the top 15 cities of China have become saturated. Luxury stores are sinking to 345 lines of cities.

However, the potential of rich online consumers in small and medium-sized cities can not be ignored. Nearly half of consumers in low-level cities are willing to try to buy luxury goods online in the next year, on the one hand they seek low prices, and on the other hand, they lack local stores.

Comparatively speaking, small brands attach more importance to the third party platform, which will enable them to enter the mainstream e-commerce market with minimum investment and eventually achieve a substantial increase in sales volume.

The top brands such as Chanel (Chanel), Dior (Dior) and Gucci (Gucci) have more concerns on the third party platform. Whether for Jingdong, Tmall or other integrated e-commerce platforms such as temple, Farfetch or Net-A-Porter, mature luxury goods brands will prefer to build their own platforms.

The director of global McKinsey Global partners, Luan LAN, predicts that in the next few years, the luxury line will still be concentrated in the second tier cities, but the form and service of the stores will be upgraded, such as the operation of new technologies and high-end customer experience to enhance consumers' purchase intention.

We must consider carefully to expand the stores to the low level cities, because the low density of the high-income group in the low line cities, plus the operating costs of the stores, the brand should carefully calculate and predict the investment return of the stores.

For consumers who are outside the reach of touda stores, they can try flash shops and make full use of the low tier city crowd to travel to second tier cities and travel abroad.

For example, in the low tier cities, we should use digital channels to publicize and invite customers to join the brand members, subscribe to the WeChat public address or keep in touch with the shopping guides directly before and after the consumers purchase, so as to maintain interaction with consumers in the low level cities.

In addition, she believes that the comparison between luxury vertical e-commerce and comprehensive e-commerce platform is not only a comparison of "vertical" and "comprehensive", but also should consider its business mode and the flow of luxury goods.

If the platform can provide a good customer experience, cooperate with luxury brands in customer data and brand image, and guide the luxury brand accurately through the tilt of platform strategy, whether vertical or integrated platform, it can have its own advantages.

Therefore, if the luxury brand is to succeed in the future, it must rely on an effective full channel strategy to enhance the participation of consumers online and offline.

This puts forward brand new requirements for brands: high frequency new content is launched to catch the attention of consumers and interact with consumers through various channels.