Gen Z’s spending patterns a mixed blessing for luxury brands in China

This article will soon be exclusive to Jing Daily Pro* subscribers. The Pro* membership will feature our most focused coverage yet as we double down on our investment in research, trend forecasting, and practical insights for brands and executives doing business in China. Pre-register for a free trial, coming later this summer. - They may be relatively new to the workplace and the consumer market, but China’s Gen Z citizens, also referred to as the “post-2000” generation – or individuals born after 2000 — have already proven elusive to pin down. With millions adopting a more toned-down style, scouring the internet or vintage stores for luxury bargains, or jumping on the “vanlife” bandwagon and turning their backs on overconsumption, China’s Gen Z is arguably more complex and diverse than its millennial cohort. A new survey from online recruitment platform Zhaopin finds that Gen Z consumption patterns in China are shaped by a blend of impulsivity and rationality, with significant implications for the luxury market. The report highlights that nearly half (49.1%) of Gen Z consumers have increased their spending to “live in the moment,” reflecting a trend towards immediate gratification and experiential consumption. This behavior is also demonstrated by the 39.7% of respondents who spend to relieve stress and 31.9% who increase their expenditure as their income rises. These trends suggest that luxury brands can capitalize on Gen Z’s desire for instant enjoyment and the status symbols associated with high-end products. However, the data also reveals a contrasting trend towards rational consumption. Nearly three-quarters (74.2%) of respondents who reduced their spending did so to prioritize value for money, indicating a cautious approach to purchasing. This duality in behavior suggests that while Gen Z is willing to splurge on luxury items that offer immediate pleasure or stress relief, they are equally discerning about the value and necessity of such purchases. Zhaopin’s findings align with a recent McKinsey survey that found urban Gen Z consumers in China prioritize health-conscious lifestyles and are willing to invest in products that support their active and healthy lifestyles. They spend more on dining out, cultural entertainment, and sportswear, reflecting their desire for social companionship and spiritual fulfillment. McKinsey also found that urban Gen Zers in China prioritize activities and products that offer social interaction and personal enrichment. For luxury brands, this dichotomy means navigating a complex landscape where brand loyalty and perceived value are paramount. Brands must balance offering products that provide an immediate, gratifying experience and those that convey lasting value and practicality. Marketing strategies should emphasize the prestige and exclusivity of luxury items and their quality, durability, and long-term benefits. Associations with certain desirable lifestyles and immersive escapism might also work well. Furthermore, Gen Z’s emphasis on rational spending and value for money suggests that luxury brands must be transparent about their pricing and value proposition. Initiatives that highlight craftsmanship, ethical sourcing, and sustainability can resonate well with this discerning demographic. Luxury brands aiming to capture the hearts and wallets of Gen Z consumers must adapt to their unique consumption patterns. This includes leveraging digital platforms and social media to engage with consumers who prioritize living in the moment, while also providing detailed information on product value and sustainability for those who favor a more rational spending approach.

Gen Z’s spending patterns a mixed blessing for luxury brands in China

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Published July 17, 2024

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Gen Z’s spending patterns a mixed blessing for luxury brands in China