China Luxury Forecast Reveals Change In Spending
Luxury shoes, cosmetics, and wines, spirits are winners in slowing, cautious market
- Louis Vuitton leads all-European group of top 10 luxury brands in China
- More Chinese buying luxury products in exclusive brand stores on the Mainland rather than splurging overseas
- Social media plays more important role in influencing consumers
The Ruder Finn/Ipsos China Luxury Forecast 2012 reveals that the luxury goods market is still relatively growing in a cautious China market and significant new consumer spending patterns are emerging.
The Ruder Finn/Ipsos China Luxury Forecast was conducted in June and surveyed 1135 luxury consumers on the mainland who earned more than RMB 100, 000 annually. About 69% were under the age of 35 reflecting the booming potential of luxury consumer market in China.
“In the past 12 months the luxury market was going strong but we see consumers are cautiously planning for the next year because of the economic news they keep reading about and this could lead to a relative slowdown. But they will not stop shopping. They will just be buying different luxury items,” says Simon Tye, Executive Director of Ipsos.
Luxury-brand watches appear to be off the shopping list with 54 percent of respondents saying they plan to spend less on watches over the next 12 months. Hand bags (48% of respondents) and jewelry (48%) are also not priorities for the coming year. But respondents said they would increase spending on luxury cosmetics (43%), high-end shoes (43%), and top-brand wines, spirits and cigars (40%).
Elan Shou, Managing Director and Vice President of Ruder Finn Asia said Chinese consumers buy luxury products mainly to reward themselves and to reflect their taste, personality and build confidence and will continue to do so this year. “We are seeing a change in spending patterns, not a drop in the desire for luxury items,” Ms Shou says.
One aspect of the luxury market that has not changed was the status of established luxury brands in the Chinese mindset. According to the Ruder Finn/Ipsos China Luxury Forecast, Louis Vuitton was ranked No.1 with a Top of Mind (TOM) awareness of 39% (without prompting) and a spontaneous recall (Spon) of 65%. The French fashion icon was followed by nine other European big-name brands.
One of the major changes is that China itself has become the major destination for buying luxury goods in 2012 replacing Hong Kong and Europe in the 2011 survey. And exclusive brand stores are the most popular point of sale for Chinese consumers to purchase luxury goods.
However, there has been a major spark in online shopping with an average of 10% of luxury goods purchased via the Internet (about 17% of luxury cosmetics were bought online). Considering the relatively young age of the consumers, almost 80% use or intend to use social media to understand more about luxury brands and products.