Luxury, Just Buy It At Home!

Chinese luxury consumers are returning. Bain's consultation on the 2018 China luxury market research shows that the proportion of luxury goods consumed by Chinese consumers in the mainland has risen from 23% in 2015 to 27%, and this proportion is expected to reach 50% by 2025. With the trend of consumer reflux, the Chinese market has become an important push for the performance of luxury brands. In 2018, the overall sales of China's luxury goods market continued to record growth in 2017, with a second consecutive growth rate of 20%. In the first half of 2019, LVMH group reported that China is the most powerful market for many brands of the group, including skin care brands Fresh and Guerlain, high-end leather brand Louis Vuitton, Berluti and foreign wine brand Hennessy. Herm s also gained a lot. In the first half of this year, sales in the mainland market achieved double-digit growth, and promoted the brand to rise by 21.1% in the Asia Pacific region outside Japan.

In order to bring consumption back to China from abroad, China's tariff has been lowered since 2015, covering the categories of daily goods and clothing, of which the value-added tax rate dropped from 16% to 13% in April this year.

In this regard, luxury brands rapidly cooperate with price adjustment in the Chinese market. According to Jessica's secret data provided by luxury price parity platform, in early 2019, some products such as Louis Vuitton and Chanel were reduced by 300 yuan to 1500 yuan, the decline was between 3% and 5%, and jewelry brands such as Cartier, Van Cleef & Arpels also lowered the price of the mainland.

Shirley Ma, a luxury goods lover who has just turned 23, used to buy abroad. Now she says she does not exclude buying in the mainland - "buying luxury goods in China."

Faced with the same problem, consumers interviewed by Vogue Business in China gave similar answers.

Ma noted that some big bags had been reduced, but she would still set a psychological price for herself. If the price difference between the domestic and overseas products was not large, she would consider buying it at home. According to the information collected by the interview, most consumers (age group mainly concentrated in the age of 20 years old -40 years old) accept the upper limit of the difference is 3000 yuan - this figure is generally counted as traffic and time equal extra cost.

"In order to save thousands of dollars, it is not necessary to go abroad to buy a bag. Unless you travel or have friends back home to help. " Ma said.

Besides the price, the style of luxury goods also affects consumers where to buy. "In the past, many new models couldn't be bought at home, and they could only go abroad or buy them for generations." Ma said.

But now, more and more attention has been paid to the luxury brand in the Chinese market, which has been synchronized in the mainland. It will even choose China as the first stop for new products. It will not only sell online, but also choose the power supplier with the advantage of big data as the selling platform.

In December 2018, when Valentino and Bottega Veneta entered Tmall luxury platform Luxury Pavilion, they started the new products of Candystud Global Limited Edition bag and LAN-STAR color Luna handbag. In addition, the holiday special limited money sold in China has also attracted a wave of purchases. On July seventh this year, more than 20 luxury brands released nearly 100 Festival limited items on Tmall, which accounted for 30% of total sales of Tanabata on that day.

More friendly and professional, store service is improving. Vogue Business in China visited Shanghai iapm, Jingan Kerry Center and the Mixc, Shenzhen, and found that luxury stores and customers WeChat has become quite common. Lucy Wu accompanied her friends on the first floor of the iapm brand De Beers shop, adding WeChat to the shop assistant. "I wasn't interested in diamonds, but the shop assistants didn't discriminate, not only gave me knowledge of popular diamonds, but also offered to try them on," Wu said. After she left the shop, the clerk invited her to participate in the follow-up jewellery exhibition through WeChat. "It makes me feel better about this brand."

Through the maintenance of customers by WeChat, the ground floor gas after-sales service has also helped many stores to improve their performance and repeat purchase rate. "In fact, adding WeChat is also convenient for customers, such as actively asking for goods and booking a lot." Shenzhen the Mixc Dior counters clerk Lynn Lin said. For stores, WeChat not only provides them with follow-up tracking customer functions, but also a zero cost advertising platform. "Now everyone likes to brush their friends circle, and we often advertise on them." In early 2019, Lin just joined the store. In October, WeChat had accumulated nearly 100 customers, of whom 1/3 had repurchase.

In fact, for different categories of luxury goods, consumers have different intentions to buy at home and abroad. In the process of visiting 12 consumers, Vogue Business in China found that for those consumers who want to get pleasure quickly through shopping, the unit price of luxury bags and clothing is relatively low, which is easy to cause impulse consumption and is often given as a gift.

"Look at these shoes, mainly for some important occasions, specially bought at the counter. When I saw them, I liked them too much, so I couldn't help chopping them." Ma pointed to the Roger Viver high heels on her feet.

However, like watches and jewellery, tens of thousands of large items of value are often exported. According to the data provided by "Jessica's Secret", most of the classic jewellery and clocks purchased in Hongkong are cheaper than those in Shanghai, Paris, Tokyo, New York and other major cities.

Whether it's a smaller price difference, better service or a new product launch time, it shows that domestic consumers are buying more luxury goods in China.

According to the Bain consultation report, 65% of Chinese households will become middle class by 2027. This also means that there will be a steady stream of "new buyers" of luxury goods in China. If the environment remains stable, it will bring more revenue to the local market.