Luxury brands hoping to gain a foothold in China should still direct their energies toward retail stores, a venue that remains important to Chinese consumers in particular.
“The Chinese are a bit touchy-feely,” explains Sun Baohung, professor of marketing at Cheung Kong Graduate School of Business in Beijing. “They like to feel and touch an item before they bring it home.”
Gregory J. Furman, founder and chairman of the Luxury Marketing Council, echoed Sun’s remarks in a recent interview with China Daily. Furman said that “luxury education” often takes place in the West via media advertisements, but that the Chinese media has not yet developed the structure to facilitate that education. Instead, Chinese consumers tend to learn about luxury products through face-to-face retail experience. Hence, Furman noted that luxury brands “realize that the presence is as much ‘advertising’ as it was a retail business.”
“I think the retail experience is probably the primary experience of luxury in China because it’s the easiest way with properly trained staff, which is a big issue, by the way, to educate the highly sophisticated consumers — the Chinese mainland consumers, the aspirational consumers who want to move up the food chain and spend money on luxury goods. It’s the most direct way to educate the population what luxury is,” Furman said.
Furman also referenced a study conducted by American Express on the development of luxury market education by nationality. According to the financial company’s research, there are four stages of luxury consumption — acquisitive, inquisitive, authoritative, and meditative — which are universal across the US, Europe, the UK, and Japan, and which Furman calls a “learning curve” of consumer awareness.
The acquisitive stage, which China has already grown out of, describes a consumer tendency to seek out products from big brands with prominent logos: purchases they can boast about.
The inquisitive stage reflects customers’ desire to understand their purchases’ price and value equation. According to Furman, China is moving toward this level of heightened awareness “very quickly, much more quickly than any other nation.”
More and more Chinese consumers are also progressing to the authoritative stage, when they can discuss their opinions of luxury goods with experts and feel secure in knowing what “luxury” means.
The meditative stage is “about the experience” of a luxury good or service and occurs when consumers have a deeper understanding of and appreciation for the value of their purchases. Furman says that mainland China will reach this stage within the next five to 10 years.
“It’s a good sign for luxury products and services,” Furman added. “Because if people understand the inherent value of the craft, the thought and the imagination that have gone into a product or service, if they understand that truly, then price does not matter. They will pay anything.”
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