July 5, 2023

China Luxury Market: Adapting to Chinese Consumer Preferences in the Luxury Market

China is growing rapidly, and Chinese consumers are becoming increasingly sophisticated The luxury market in their tastes. The study conducted by KPMG explores the changing landscape of luxury consumption in China and identifies five key personas that luxury brands need to understand to succeed in this market.

Audience Demographic Profile

The study surveyed 2,653 consumers in Tier 1 and 2 cities in China and Hong Kong SAR. The majority of respondents were female (62%), and the average age was 35. Most respondents had a high level of education, with 60% holding a bachelor’s degree or higher.

Key Findings

The study found that Chinese consumers are motivated by a variety of factors when purchasing luxury goods, including:

Social status: Luxury goods are seen to signal social status and success.
Self-expression: Luxury goods are also seen to express one’s individuality and personal style.
Quality: Chinese consumers are increasingly demanding high quality in their luxury goods.
Experience: Luxury brands need to provide an immersive and memorable experience for Chinese consumers.

The study also identified five key personas that luxury brands need to understand to succeed in China:

Luxury Newcomers: These consumers are new to the luxury market and are looking for affordable entry-level products.
Status Reflectors: These consumers are motivated by social status and are looking for luxury goods that will help them show off their success.
Community Approval Seekers: These consumers are looking for luxury goods that will help them fit in with their social group.
Luxury Connoisseurs: These consumers are highly knowledgeable about luxury goods and are looking for the best possible products.
New Luxury Pioneers: These consumers are looking for luxury goods that are innovative and sustainable.

Recommendations for Luxury Brands

Based on the findings of this study, luxury brands can make the following recommendations to improve their chances of success in China:

Target megacities and expand to emerging ones: Luxury brands should focus their marketing efforts on megacities, such as Beijing, Shanghai, and Guangzhou. However, they should also expand their reach to emerging cities, such as Chengdu and Hangzhou.
Respect the local culture: Luxury brands should ensure that their products and marketing campaigns are respectful of Chinese culture. This includes using Chinese language and imagery and avoiding any cultural appropriation.
Be purpose-driven: Luxury brands should create products that are more than just status symbols. They should also be purpose-driven and contribute to society in some way. This could include donating to charity, using sustainable materials, or promoting social causes.
Create digital shopping experiences: Luxury brands need to create a robust and consistent digital shopping experience across channels. This includes having an online store, social media presence, and mobile app.
Capitalize on Gen Z growth: Luxury brands should focus on Gen Z consumers, who are increasingly interested in luxury goods. They should use new technologies to engage with Gen Z consumers and educate them about the brand story and products.
Tap into the trend for ‘New Luxury’: Luxury brands should tap into the trend for ‘New Luxury’, which focuses on inclusivity, sustainability, and innovation. They should create products that are innovative, sustainable, and accessible to a wider range of consumers.
Understand the needs of emerging personas: Luxury brands should understand the needs of the five key personas identified in this study. They should tailor their products and marketing campaigns to appeal to these personas.

Conclusion

The luxury market in China is changing rapidly, and luxury brands need to adapt their strategies to keep up with the changing demands of Chinese consumers. By understanding the key personas that drive luxury consumption in China, luxury brands can develop products and services that will appeal to these consumers and succeed in this growing market. By following these recommendations, luxury brands can improve their chances of success in China.