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Oct
2015

Who do price adjustments really attract?

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Comparing prices and purchasing discounted products that are not available elsewhere are two fundamental characters of the Chinese consumer, which is why purchasing overseas and in particular in luxury outlets is so popular among them. Recent price adjustments by luxury brands in China began with Chanel in April. Of the discounting brands, Chanel and Gucci are doubtlessly the two biggest names; the first one reduced its prices for the first time ever, and the second offered as much as 50% discount on some products even in its major stores. These recent discounts appear to the Chinese consumer a little like bringing the overseas outlet store to China and are definitely a reason to spend locally.

Ms. Song, a consumer in Jinan said that she had been asked to purchase a bag for a friend who lives in a city that does not have a Gucci store: “My friend had heard there was a sale, and asked me to buy a bag for her.” But when asked about buying for herself in the sale Ms. Song said her Gucci bag had actually been purchased abroad, and the reason why she didn’t also buy one this time was that she hadn’t found one she liked. So the price wasn’t the driving force for her.

Another consumer, a 28-year-old follower of fashion Ms. Liu, told us that her friends weren’t very excited about the sale because they know discount during the sale season abroad is higher than that in China. “In addition there are many more choices in overseas stores,” the price of her own Burberry bag which she bought outside of China was only 4,000 RMB after discount; the same bag could never be found at this price anywhere in China.

This type of contradictory reaction demonstrates the two different attitudes of Chinese consumers; the first are very price-sensitive entry level consumers from T2 and T3 cities who are waiting for a chance to travel abroad during which they will shop; and the second from T1 cities are also price-sensitive but have greater access to the products abroad so these large price reductions are not of immediate interest to them as they can wait to shop at another time.


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