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Luxury Brands in China Adapt to the New Normal

June 7, 2021 | Danielle Sumerlin

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Luxury jewelry and watches are transforming to grow in China.

Vogue Business reports an 18.6% growth in luxury watch sales predicted by Euromonitor International for 2021. Although brick-and-mortar stores continue to be essential for growth, 31% of Chinese consumers say they’re “most likely” to purchase a watch online. Perhaps reflecting this strong trend, Swiss watch exports to China were up 20% last year, the only market to show an increase.

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Luxury campaigns found new ways to show their love for digital Chinese Valentine’s Day, 520.

In a fun take on the usually romantically-focused holiday, Clarins said “520” to outdoor city workers in Shanghai, thanking them for their work in the heat (“520,” wuerling, is a homophone for “I love you,” woaini).

Under the campaign title, “You guard the city, I guard you,” the beauty brand gifted workers with hats, fans, sunscreen, and flowers. Clarins' WeChat post held a comments-based competition to get more people involved. It asked readers to share what they would like to say to those who keep our cities running (with five commenters getting a summer-themed gift). The top comment said, “they are the city’s most lovely people – ‘city beautician’ ‘road angel’ sanitation workers.”

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Appealing to the happiness of gifting yourself, Bvlgari declared that “Love is a planet of happiness, set your roots here and let happiness surround yourself.” This theme fits well with the growth of China's she-economy, which sees upwardly mobile, professional women buying luxury items for themselves. Women under thirty are expected "to become the primary consumer force" and prioritize personal interests, notably online shopping, in their spending.

Download our report in collaboration with Dao Insights, 520 Campaigns: Luxury’s Best WeChat Campaigns of 2021, for a deep dive into how luxury brands connected with their audience over this modern day of love.

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Rimowa and Chaos’ fun collaboration appeals to China’s Gen Z.

The event runs from May 29th to June 13th and has features that appeal to China's young luxury consumers.

Personalization: The collab has produced stickers and tags for shoppers to customize their pieces. China’s Gen Z has a strong preference for personalization, with fifty-one percent answering that they “prefer brands that can customize their products for me” according to McKinsey & Company.

Photo-worthy: Outdoor art installations allow for more interaction with shoppers in the upscale Tai Koo Li mall and capturing sharable moments, which is increasingly important. The same McKinsey & Company report found that seventy-seven percent of China’s Millennials and Gen Z place “online reviews,” including social media posts, as one of their top three sources of influence before making a purchase. Compare this to only fifty percent of Millennials and forty-three percent of Gen Z placing face-to-face recommendations in their top three sources.

Offline-to-online integration: When attendees check in to the event, they get a chance to unlock surprises by following along digitally. As Jing Daily has noted, “Young consumers have grown up accustomed to immediacy and transparency while prioritizing meaningful storytelling as they follow their favorite brands as if they were friends.” By keeping the offline connected to the online, this event will have a longer-lasting effect on Rimowa’s relationships with its social media followers.

Balance of exclusivity and inclusivity: The boutique opening also features single products made out of unique materials and colors, giving attendees a chance to catch a glimpse of something few others will. At the same time, Rimowa set up an ice cream truck and public art for all to enjoy, making the event feel welcoming.

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04

Will brands’ efforts to build authentic relationships with Chinese consumers succeed?

“China continues to drive recovery” in luxury, and we love how brands like TAG Heuer continue to adapt to the new normal to build relationships with their customers.

Bain & Company and Fondazione Altagamma report that “…customers are expecting a tech-enabled human relationship with brands.” The pandemic lockdowns of 2020 accelerated Chinese shoppers’ comfort with online shopping, and the trend has remained.

Enter Tag Heuer’s new WeChat Mini Program, where users can find local classes at the brand’s stores to attend, including smart-watch fitness classes. It uses its audience's comfort with WeChat to foster face-to-face connections and a sense of community.

“Winners will need to stay closely in touch with the key trends shaping the new normal lifestyle – all while remaining differentiated and creating a narrative that is true to their own culture.” With health taking top priority for many following the challenges of 2019 and 2020, moves like this and Hermès’ HermesFit Mini Program are right on target.

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We also see this trend in pop-up stores that connect to WeChat Mini Programs and Weibo campaigns to create "phygital" events. Salvatore Ferragamo’s “Secret Urban Environment” in Beijing and Burberry’s integration of their customers’ online and offline relationship with the brand (like earning online points for offline activities) are other examples.

As the China market continues to increase in importance for luxury brands, we look forward to brands' creative initiatives to engage Chinese consumers beyond superficial attention-grabbing. The real question is, will brands do so in a way that creates a "two-way conversation" with responsive listening? If not, shoppers may take note and then take themselves elsewhere.

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