24
Aug
2011

Increased consumer knowledge, a challenge of adaptation for luxury brands

It doesn’t take long for the Chinese to learn something new; it’s part of their cultural DNA. Their exposure to luxury has been a relative short one, which started as a need to show that they had money, and now manifests itself in an expectation of much better service and general treatment by luxury brands.

Naturally, luxury has been in tier one cities the longest so the change has started here, while the urban populations of lower tier cities are still enjoying the pure status that their luxury purchases bring. The urban dwellers of the top tier one cities now expect a different kind of store and a different level of service.

The top brands have reacted to these demands by opening flagship stores which are an Aladdin’s den, offering a very comprehensive product range and some special products not available in their other stores. Some brands have expanded the size of their stores, and in a few cases, moved them to a newer and more attractive location. The hope is that the change of view will make existing consumers remain loyal and build a stronger relationship with the brands.

Every brand now also understands that the level of service they are offering needs to be improved, in some cases dramatically. The challenge is and has always been staff retention and the balance between investing in staff development and the high churn experienced in China. It’s not unusual to see newly trained staff leave one brand for a better offer at a competitor who then doesn’t need to spend money on their training. Staff who work for those brands that invest in thier training become the target of those who don’t.

Unfortunately this issue is one the brands must resolve and the consumer doesn’t care about. The educated luxury consumer is not expecting better service just because they have money. No, they have now learned that being a luxury brand involves multiple touch points and only having high quality and expensive product’s doesn’t really make you luxury. They want personal luxury, individual luxury and tangible luxury, and so they should.

In a country where general service standards are poor for many cultural reasons, luxury brands have their work cut out to make their stores and the engagement with them an end-to-end luxury experience. No doubt they will get there, because they have no choice. They acknowledge that Chinese consumers will be the bread and butter for the business for many years to come, and that the investment will be worth it.

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