How young Chinese consumers are reshaping global luxury (McKinsey & Co)
- Young Chinese consumers, born post-1980 and 1990, have begun to increase their luxury spending, spurred by increased family income, the belief brands are a form of social capital and effective digital marketing.
- China will be the driving force behind global growth in luxury spending, accounting for an estimated 65% of growth between now and 2025. Luxury spending within China is set to double to RMB 1.2tr.
- Key to brand success is their ability to differentiate themselves and convince young Chinese consumers that their respective brand gives the consumer a level of social advancement or differentiation. The most successful brands will be those that take advantage of the digital ecosystem in China.
Analysis & Comments
- The McKinsey annual luxury survey has been highlighting for a number of years now the rising importance of the Chinese consumer to the luxury sector. The China luxury report 2019 is showing a continuation of this trend, but with some very interesting demographic and technological overlays.
- Overall, McKinsey expects Chinese luxury spend, driven in a large part by younger consumers, to grow at 6% pa out to 2025, compared with only 2% in the rest of the world.
- Unlike many more traditional western consumers, younger Chinese as a group are more focused on luxury as aspirational rather than a reflection of heritage. To tap into this requires a slightly different approach, exclusively matters butin a more personalised & “modern” manner.
- In addition, the younger Chinese consumer is much more digitally focused. This is again in contrast to the traditional markets, where digital is more advertising & image building than marketing.