|While much of the world has continued to reel from the impact of the Covid-19 pandemic, China – the world’s largest and most important luxury market – has rebounded and is now more important than ever. |
Luxury brand clients we speak with are seeing their China sales rebound after experiencing sharp dips in the first two months of the year. “China is definitely on the rebound track,” one luxury brand’s China CEO told us in April. “We’re seeing high-digit growth every week,” a luxury fashion brand’s APAC CEO told us.
For many brands we speak with, sales have returned from low dips in January and February up to 70-80% of 2019 levels, and gaining each week. Others have already recovered to year-ago levels and are shooting for positive growth in Q2.
At first it manifested itself as “revenge spending” – retail therapy to reclaim a sense of normality in the immediate aftermath of the harshest lockdown measures in February.
But since then, life has returned to normal more and more with each passing week and with it has come spending by affluent and wealthy consumers, a traditionally more resilient segment than the market as a whole.
And while the wider market may be focusing on rationalizing consumption during this post-Covid period, affluent and high-net worth consumers’ wallets are continuing to open up, creating some key opportunities for luxury brands.
In our research with consumers and leading luxury executives we found some key lessons brands can take away in other markets as they emerge:
1. Be where your customers are – online.
Brands we spoke with used the period to make a strong online push, not only by increasing their focus on e-commerce channels (in some cases opening up stores on platforms like Tmall), but also using a wide array of digital methods to stay in contact with and top-of-mind among their clients. Whether it was shop assistants reaching out via WeChat, releasing more story-driven mini-films, engaging with brand fans via official accounts to participate in contests, or live-streaming video events, smart brands found creative ways to build relationships and brand awareness.
These were especially key for reaching consumers in lower-tier cities, for whom online remains their only way of buying without access to a local physical boutique or overseas travel.
One high-end jewelry brand we spoke with re-purposed a planned exclusive offline event into a private online viewing for VIP clients. The lesson is clear: don’t cancel events; find ways to make them work online.
2. Focus on relationships with your most loyal clients.
Many of the brand leaders we spoke with told us their VIP customers were the first to come back, and that staying in close communication with them and showing love and care – rather than being transactional – was key to deepening those relationships. Brands sent VIP clients hand-written notes and care packages with relaxing teas and hand creams rather than new product notifications.
“Going forward, people will be closer to brands that think of them beyond transactions,” one fashion brand regional CEO said to us.
|The shock of the Covid pandemic has shifted the way consumers think and behave, perhaps for a long time to come.We will continue to monitor these and other important changes in the upcoming second wave of our TrendLens™ 2020 Affluent Insights study, in which we provide an updated picture on how consumers’ outlook, spending, and definitions of luxury have changed, and how brands can respond.|
Check our TrendLens™ 2020 Report promo video here.
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