Bottega Veneta, Loewe Likely To Gain From Changing Demand
2012 was, to say the least, a turbulent year in China’s red-hot luxury market, with Chinese buyers showing more restraint in their luxury spending and several high-end watch and wine brands recording a drop in sales. Owing to changing tastes and a broader lessening of conspicuous consumption (at least in top-tier cities), Chinese buyers are becoming more selective, a trend that is boosting some brands while causing migraines for others.
Disproportionately, the shifting sands in the Greater China luxury market are benefiting brands that tend to fly under the radar and speak to the individualism of the buyer. As a recent survey on Chinese luxury consumption by Epsilon points out, “Chinese consumers have shown greater gratitude for the intrinsic value of products and consumer experience that differentiate their lifestyle and sophistication.”
Additionally, as the survey revealed, the new Chinese consumer is no longer dependent on big brand-name logos as a means to display their wealth and status. Instead, they have more recently shifted to a focus on heritage, durability, and tastefulness. This week, Paul French writes in China Economic Review about the rising trend of “stealth wealth” among some Chinese shoppers, buying more discreet high-end brands with a greater emphasis on materials and craftsmanship.
French notes that more discreet but high-quality brands like Bottega Veneta (34 stores, two outlets in China) and Loewe (17 stores, one outlet) are catching on among more Chinese consumers. This corresponds to the survey by Epsilon, which indicates that 46 percent of Chinese respondents are loyal to their favorite brands because of their consistency in terms of “good quality and services.” Increasingly, demand for more low-key apparel and accessories among Chinese consumers may be influenced by the new first lady Peng Liyuan, whose more refined sense of style (and no-logo wardrobe) recently caused an online sensation in China.
Although China’s luxury market remains on the rise, albeit a gentler one, ultra-high-end brands like Vacheron Constantin and Piaget are, as Paul French pointed out this week, likely to encounter difficulties obtaining new buyers. While far from every Chinese luxury shopper, particularly those in inland areas, could be called “sophisticated,” those who are want more from their purchases – not only in terms of quality but also discretion and service. For brands, this means pleasing this consumer segment will take far more work than it did in the boom times of 2011.
This observation is held out by Vivian Deng, client services director of China at Epsilon. Adds Deng, “as consumers in China are becoming more savvy, they are not as easily influenced by brands as they once were. They are also more skeptical than ever before about what they see and read online.”