Millennials have more money and different priorities than earlier Chinese generations
They purchase luxury online, in-store, and while traveling
by Alexander Runne
Chief Strategy Officer
Ogilvy & Mather Group, Shanghai
It’s no secret that China’s post-90s generation has a passion for luxury as powerful as the previous generation’s in this voracious consumer market. The differences are the degree to which they’re spending, what’s motivating them to spend, and where they’re spending.
As such, there are three things a luxury marketer looking for meaningful engagement with post-90s consumers must know: (1) Even in a cooling Chinese economy, young luxury consumers are buying more than ever; (2) Digital isn’t just for discounts anymore; and (3) Your Outbound China marketing strategy matters.
Affluent post-90s Chinese consumers spend dramatically more on luxury goods compared to their peers in the rest of Asia – on average $4,000 per year versus just $2,500. And this aggressive spending on luxury goods is coming at a time when the traditional markers of success are feeling less attainable for the young than they were for their parents, who grew up in an era of double-digit annual growth. Here are several key insights into the millennials and their relationship to luxury.
High rollers Over half of post-90s Chinese believe home ownership is a burden, and nearly half say marriage is unimportant as long as they’re happy. The money that once went to these big, expensive life goals now goes to fund discretionary luxury purchases, with nearly two-thirds of Chinese millennials saying they want more luxury goods now than they did five years ago. And they’re putting their money where their mouths are, doubling individual spending in categories like luxury watches and jewelry over the past five years.
Online is the new in-store For older Chinese, making luxury purchases online meant one thing only – discounts. Chinese post-90s, however, are far happier than previous generations to pay full price for luxury goods via e-commerce, with 37 percent of 18-to-24 year olds doing so in the past year, versus 19 percent of those aged 40 to 49.
But post-90s shoppers are looking for shopping experiences online as rich, if not even richer, than what they’d find in-store. These buyers expect you to work for their money online. Half of them say they’d rather spend money on a luxury experience than a luxury product, so work to make your e-commerce a destination.
Luxury here, there, everywhere China’s tourists are fueling one of history’s largest tourism booms, and it’s only just beginning. And where China’s young tourists go, luxury purchases follow.
Half of all young travelers say they’ll buy a luxury item in-store when they travel to another country. By way of example, year-on-year sales to Chinese tourists in Korean shopping malls are up over 60 percent in 2016. Further, Chinese tourists comprise nearly 80 percent of all duty-free sales in Korea.