Chinese Millennials have a big appetite for buying luxury products, but their spending habits have changed a lot due to how they want to be perceived in Chinese society and because of self-consciousness, according to Ogilvy Chinaâ€™s latest report.
Ogilvy China released the â€śMaking Luxury Brands Matterâ€ť report, focusing on the distinct differences from the post-1990s, and what brands can do to engage this age group.
The report highlighted the total share of consumption by 19 to 30-year-olds will grow from 45% in 2016 to 53% in 2020 in China.
Also, in the next six to seven years, 70% of luxury growth will come from China. Chinese luxury consumers will account for 40% of global luxury purchases by value (162 billion Euros or 1.266 trillion Chinese Yuan) in 2024, from 32% in 2017. Two-thirds (68%) of luxury consumers are between the ages of 18 to 30.
The agency suggested several aspects of consumer behaviour that luxury brands need to satisfy to build a long-lasting relationship with them. For example, this group of Chinese people prefer customised items and uniqueness and do not want to â€śgo with the crowdâ€ť.
To meet consumersâ€™ needs, the report suggested the product portfolio of a brand needs to reflect a variety of consumer tastes and styles. Personalisation and customisation are crucial to winning the hearts of consumers.
Luxury products were equivalent to showing money in China in the old days. However, the Millennials now want to be perceived as an interesting person or a talented person. To help them demonstrate the status of having a wealth of experience or knowledge, brands can switch their focus to how their products can help young consumers display their knowledge or showcase a unique experience, such as world travel, rather than showing an extravagant life.
Creating rarity â€“ the feeling of privilege and exclusivity â€“ is also the key to connecting with consumers. Regularly launching limited editions or collections that are related to post-1990sâ€™ different hobbies, interests or passion points are examples of rarity. Personalisation or customisation can also create rarity as well as communication and memory.
To build up relationships with customers at their early stage, Ogilvy China has suggested brands offer a wide range of accessible or entry-level products to recruit young people, as they do not buy luxury items for celebrating lifetime achievements.
An omni-channel customer experience is another way to attract customers. The application of social commerce in luxury goods marketing is thriving as social media is the most influential form of media among all possible influencers of luxury goods purchases.
Under the one-child policy, Millennials in China could be the only child in the family, and they now use different ways to strengthen the sense of companionship and teamwork. Ogilvy China said brands can adopt a â€śfriendlyâ€ť approach, rather than an unapologetic mentality to engage customers, as Millennials prefer companionship now.
â€śLuxury brands entering the market know it is a completely different China today,â€ť said Mickey Chak, chief strategy officer for Greater China at Ogilvy China.
â€śThe new generation of middle-class consumers are much more complex, diverse and knowledgeable than their Western counterparts, and their power impacts markets on a global scale. The interaction they have with brands domestically influences their purchases abroad.â€ť