Who are China's Affluent Consumers?
Chinese consumers account for about one-third of the world’s total spending on luxury, even though only 8% of such consumption takes place on China’s mainland. It is estimated that, by 2025, some 7.5 million affluent Chinese households will be spending Rmb1 trillion (US$147 billion) on luxury goods, this representing a year-on-year growth of 25% since 2016. It is little wonder that China is a top strategic priority for lifestyle and luxury brands.
A number of macro forces including attitudinal shifts, younger consumers, women’s participation in the workplace, and technology, have been at play in China over the past five years or so that have changed and continue to change China’s consumer landscape as far as lifestyle and luxury offerings are concerned. We can see three important insights emerging:
- Innovation – in its broadest sense – is critical for a lifestyle or luxury brand to stand out in China’s increasingly cluttered space.
- Digital and e-commerce must be an integral part of the brand’s value proposition to complement brick-and-mortar boutiques.
- Compelling offline and online experiences must complement distinctive product ranges to engage consumers and move from transactions to sustainable, long-lasting relationships.
Not all lifestyle and luxury brands will be able to accomplish all these things on their own and therefore they must learn to partner with other brands, in perhaps different categories to deliver greater value to their target consumers. But, what is certain is that Chinese affluent consumers will reward those brave enough to embrace the new normal.
