05
Mar
2013

Developing the service culture, a profitable way forward for luxury brands in China

True luxury has always been about the service delivered by the brand as well as the quality of its products, and in many cases it’s been the service that the brand has been particularly recognized for. Having said this, in the past few years, global luxury brands have been accused of loosing focus in terms of service, and as a result loosing their status in the eyes of the consumer. Selling the product has become the new mantra, as opposed to servicing the customer.

China is not a service orientated society, as can be seen by most who come here when they leave the comfort of their hotel and walk the streets. Ask directions and its probable that someone will mutter some sort of ambiguous reply, whilst pointing with their head and not looking you in the eye. It’s too much effort in most cases to be helpful. Enter a luxury store, and the assistant will firstly look at your shoes or handbag, and then decide whether they will help further. They may follow you around, or ignore you, but they will not ‘service’ the customer, only sell to them when the time comes.

Chinese luxury consumers prefer to buy overseas, one reason is a higher level of service, which as I have already mentioned is regarded as poor by the locals so imagine what they would think of service in China. Its possible to generalize about service in luxury stores across China, and in general, it needs a great deal of work, but personal experience has demonstrated that service in tier two or three cities can in fact be much higher than that in a tier one city, where staff often prejudge customers and deliver minimal service.

When you think about it, in some ways poor service is understandable, because store staff have limited experience as a customer of receiving true luxury service. They may have been to five star hotels and watched what goes on, or perhaps eaten dinner there, but they haven’t had any prolonged exposure to it. Service relates to attitude, and a passion for the job; both are low here in China. Unless people are motivated monetarily to deliver high quality service, they don’t see the point. Tipping does not exist, and those working in a store are rewarded with commission, so they rightly focus on finding a person who clearly has money and intent to purchase, and ignore service and the rest of their retail team.

After the relatively poor performance of the sector in 2012, many brands have determined to redevelop their existing stores and not open new ones, which is logical and cost effective. However, developing a true luxury service culture is in my view the real way to make a difference to the customer and directly to the bottom line by increasing the spend per person, and the sales made as a result of personal recommendation to others. In China, the first mover becomes a hero, there is no time to wait for others to test the market.

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