It’s obvious that millennials seek individualist styles, custom-made products, and experiences. What’s not so obvious is how to target them. For luxury brands today, it’s not enough to treat them as one homogenous group, their behavior differs widely by age and location.
According to the latest report by CBNData and the Bank of China’s Shanghai branch, affluent consumers between the ages of 23 and 28 in Shanghai are an important demographic that should be on the radar of luxury brands. Shanghai is a major center of luxury spending, with a large population and high average purchasing power. Referred to as the post-90s generation, millennials between the ages of 23 and 28 have started working and accumulating more disposable income. This has increased their willingness to spend.
The following are three highlights of the report that luxury brands need to be aware of to further explore Chinese millennial spending consumption:
1. From household name to niche brands
As their taste in luxury products has grown more sophisticated, their taste in handbag brands has moved from household names like Louis Vuitton, Chanel or Gucci, to relatively niche ones such as Celine and Loewe.
For cosmetics, they prefer to buy a mix of premium and mass brands. Lipstick is still a post-90s millenial’s favorite item to buy. This demographic’s top five favorite premium beauty brands are Christian Louboutin, Cle de Peau Beaute, Tom Ford, Missha, NARS, Burberry, and Chanel.
2. From materialist to healthy lifestyle-focused spending
Furthermore, as the definition of luxury has become more fluid, the luxury spending of post-90s Shanghai millennials has become more unconventional. They have not only shifted their attention from household name brands to niche brands, but also diversified the categories of luxury goods they purchase, from handbags to athleisurewear and skincare products. Overall, there is a greater focus on consumption that promotes a healthy lifestyle.
These cross-over interests could pose new opportunities as well as challenges for brands to tackle, pushing them to reevaluate what it means to build a lifestyle brand today and how it can resonate with young Chinese millennials.
According to the report, many post-90s in Shanghai choose to participate in running as a way to blow off steam in an urban environment. In comparison to last year, this generation spendt 27 percent more on running gear and 60 percent more on running shoes.
70 percent of post-90s, female consumers invest in high-quality skincare products. They like to purchase a wide variety of skincare products, such as serum, eye care, and facial masks. As for brands, they overwhelmingly choose high-end brands from Europe, Japan, and South Korea, instead of lower-priced domestic brands. It’s possible that this demographic is more concerned about the quality of goods, and believe the pricing of products correlates with its quality.
3. From online to offline
Coming of age in the internet era, post-90s millennials are well-accustomed to digital shopping. On average, they open their shopping apps 10 times a week, and over 30 percent of them browse on these apps more than 15 times a week. They also demonstrated a high frequency of mobile shopping, placing online orders at least once a week. According to the report, the amount of the money they spend online is 54 percent more than that of the average population.
In terms of entertainment, they value opportunities that enable them to jump from online to offline. Their spending in physical spaces has grown more than 10 percent since last year, which is five times more than the entire population. Going to concerts is their top form of entertainment, and they attend celebrity shows more often than the people in other age groups. Events like these could be great opportunities for luxury brands to target their advertising.
The post-90s generation is also eager to engage in experience-based shopping, and many are adventurous FIT travelers. According to the report, 56 percent of their travel expenditure is on overseas trips, and their overseas spending has increased more than 40 percent in the past two years.