BoF Masterclass | Dynamic Journeys: China’s Luxury Shoppers at Home and Abroad

Created by BoF’s journalists and editors, in conjunction with our wider network of leading fashion creatives, thought-leaders, and innovators, Masterclasses are in-depth webinars with supporting resources, designed to deliver key learning outcomes on critical industry topics.

Watch on demand here:

Background:

Not so long ago, global luxury brands and retailers primarily focused on courting Chinese customers while travelling abroad, visiting flagships in New York, Paris and other fashion hot spots. No longer. As a new report from BoF Insights — Dynamic Journeys: China’s Luxury Shoppers at Home and Abroad – shows, a growing amount of Chinese luxury spend is taking place locally.

It’s a shift that is explored in this BoF Masterclass episode, featuring Amanda Bacal, senior vice president of marketing at Joor; Prudence Grace Lai, senior analyst at Euromonitor International; and Iris Chan, partner and head of international client development at Digital Luxury Group, in conversation with report co-authors, BoF Insights’ director of research and analysis Diana Lee and senior research lead Benjamin Schneider.

Key Insights:

• Local destinations are increasingly attractive for Chinese luxury shoppers, including Hainan — the island was the top choice among respondents to a survey conducted for the Insights report about domestic travel plans in the year ahead. Domestic duty-free is considered to be an important vehicle to boost domestic consumption in China, “Typically, Chinese customers shop for luxury in other markets because of two key reasons — price disparity and authenticity. With the price harmonisation strategy [as part of government policies spurring duty-free retail], many Chinese are happy to stay shopping domestically, especially in Hainan,” explained Euromonitor’s Lai.
• Unlike previously, China’s luxury spending will not be driven by the middle-class, said Digital Luxury Group’s Chan. “Now you have these high-net-worths that are keeping that flow of luxury spend going and you really do see that reflected in the retail spaces. When you go to the luxury malls, there are now dedicated spaces just for VICs, VIPs.”
• The value of domestic transactions is rising, according to Joor’s Bacal. “The average price point that’s being bought by Chinese retailers has gone up by about 40 percent, and that’s from a base that’s already higher than the global average,” she said.
• “With the pandemic, [the focus on] domestic luxury spending has increased assortments,” said Digital Luxury Group’s Chan. “The range of products that are coming into China for the Chinese consumer is not limited. [Brands are] really starting to offer all the pieces of a product line with them.”
• Whether at home or abroad, gold-plated customer service is table stakes for global luxury players, according to Joor’s Bacal. “Definitely look at [delivering an] exceptional in-store experience, as that has become the expectation of the [Chinese] customer,” she said.

Additional Resources:

• BoF Insights | Dynamic Journeys: China’s Luxury Shoppers at Home and Abroad: Chinese fashion and beauty customers — long pivotal for the global luxury market — are reshaping how and where they shop, according to BoF Insights’ new report.
• BoF Insights | How to Tap Into the Enduring Appeal of Branded Luxury Hotels: As global travel continues its post-pandemic recovery, BoF Insights explains how hotels and resorts are helping luxury brands from Bulgari to Gucci stay close to their customers, even when they’re on the road.
• Fashion’s China Hiring Challenge: Last year’s harsh pandemic restrictions and recent raids on foreign firms have made it harder for Western fashion companies to persuade top international talent to move to the country.
• China’s Fashion Mall Developers in Turf War: Property developers are set to build 8 million square metres of retail space in a sign of long-term confidence in the troubled but increasingly competitive market.