There's nothing quite like word-of-mouth when it comes to marketing to Chinese consumers. Luckily for labels like Hugo Boss and Max Mara, accessible luxury brands are increasingly finding themselves the topic of conversation, according to a recent report by digital intelligence firm L2. A study of the number of brand mentions on popular social cross-border e-commerce app Little Red Book, or Xiao Hong Shu, reveals that over the past year, accessible luxury brands have experienced the highest growth.
Little Red Book, commonly called just "Red" in English, has more than 5 million monthly users who use it to research what products they want to purchase when traveling abroad or to share information about what they've bought. It has more recently added a cross-border e-commerce feature that is mainly utilized by daigou as well as a handful of official stores by Korean beauty brands.
L2 researched the number of times brands get mentioned on Little Red Book, and the app's users are still talking about big luxury labels more than other subjects. Chanel came out on top with 2.24 million mentions in the past year, with Dior following close behind at 2.14 million mentions. Meanwhile, Hugo Boss saw a 271 percent jump in mentions, with Bally and Max Mara both achieving growth of 133 percent.
Head of Asia Pacific Research at L2, Danielle Bailey, said one reason for the growth in mentions might partly be a consequence of the price gap between China and retailers abroad. “What we're seeing is that specifically with brands based out of the States, the difference in pricing between a lot of accessible luxury brands, like Alexander Wang or even Michael Kors is significant,” she said. “The price differential on a percentage basis is much higher on accessible luxury than it is on your pure luxury brands. It means that when you travel, it makes much more sense to buy it overseas.”
However, when it comes to the watches and jewelry sector, the trend is just the opposite. Only one brand in the top 10 list for highest growth in mentions is not an “absolute” luxury brand, “suggesting Chinese consumers may be trading up,” the report says. DeBeers was at the top of the list with 181 percent growth, while Pandora was the most talked about brand with 33,000 mentions.
While Little Red Book is helping brands indirectly reach out to Chinese travelers, it's only one of the digital avenues brands are using. L2's report highlights that it's important brands make the most of omnichannel strategy opportunities in China's digital travel retail spaces so they reach consumers planning out their shopping route online for their next vacation abroad.