17
Feb
2014

2014 for luxury in China: predictably unpredictable

Predictability is not a word that those who of us who are familiar with China, or in particular the Chinese luxury consumer would use to describe them based on their past performance and hence its not a word, other than at a very high level that would appear in insight about the market in China in 2014. Having said this, I would however, make the point that the unpredictability in China is perhaps the most predictable aspect of the country.

There are two aspects that influence the unpredictability of the Chinese consumer, the first is government policy, and the other is the herd mentality. The former, as we saw just before the new leadership were appointed and since that time, where a policy can be implemented that changes the lay of the playing field overnight, and leaves no time for luxury brands to create a plan B. The latter, is a cultural habit that dictates to a greater extent how the vast majority of consumers can move from being fan’s of one brand to another, in a matter of days or weeks. Both can create winners and losers in a heartbeat across every sector, not only that of luxury .

So given the influences above, is it possible to predict with any accuracy how the luxury sector in China will fare in 2014? The simple answer is probably in general terms, but specifics would be very difficult to nail down. What I am confident in saying is that for brands operating in China in 2014, things are certainly not going to get better, and I expect to see rationalisation in terms of geographic coverage, simply because the existing footprint for many brands here was planned out 24 months ago, when the sales potential across the country had a more rosy sheen.

But it’s not a gloomy picture for luxury brands operating outside of China, particularly as travel for many Chinese is now about lifestyle and not just purely shopping. Of course the shopping remains on the to-do list, but shopping for new, interesting and less high profile brands that fit into the consumers lifestyle and personality, rather than mainstream and more established names they find en-mass in China. The door has, and will continue to be open to more unique and individual brands to sell to Chinese consumers, but they still need to tell their story in China.

2014 will not be a smooth road for any luxury brand no matter their size and history in the country. Consumers have moved on, they are looking for more from the product and from the brand, and now have greater self-confidence to make what might have been difficult purchase decisions in the past.  The Chinese luxury consumer is on a trail of exploration and self-development, and any brand that wants to be adopted by these consumers needs to be more personable, more approachable and accessible, all of which requires new thinking and flexibility. My hope is that 2013 was a year in which luxury brands learned something new about the Chinese consumer, and now have an opportunity to apply this knowledge. If they don’t, my expectation is that 2014 may well be a year they might choose to forget.

 

Ken Grant
Ken is the publisher of Luxury Insights China, he is regularly asked for his comments and opinions of the luxury sector in China by the media, and speaks at conferences on the subject. His international marketing experience covers 25 years, and most territories of the world.

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