Luxury brands face increasingly complex challenges in China – CPP-LUXURY

One challenge that practically all luxury brands are facing is addressing the rapidly changing expectations of Chinese luxury clients, which are among the youngest in the world. While many brands blame external, they should instead examine their Chinese luxury clients’ shifting desires. Brands may face severe challenges if they are not paying enough attention to this critical audience.

The market dynamics driven by a sophisticated, digitally native, and ethically conscious client base require a strategic recalibration. Chinese luxury clients today demand more than status symbols, generic country of origin denominations, and fancy logos. Instead of generic promises, sophisticated Chinese clients increasingly seek brands that provide uniquely personalized experiences and exhibit unique brand stories

The digital expertise of Chinese audiences empowers them to make well-informed decisions and understand when brands provide authenticity or not. Brands that fail to innovate and adapt risk obsolescence in this dynamic market. The younger demographics, particularly Gen Z and millennials, are pivotal in driving luxury’s growth within China. They only buy brands that are aligned with their values.

The failure of many incumbent luxury brands to resonate with Gen Z is a principal reason for their declining popularity. While quality and exceptional craftsmanship are expected from every luxury brand, the real desire is unlocked by the brand story. The quintessence of luxury is the creation of extreme value that extends beyond the physical product to encapsulate a holistic and extraordinary experience, which, importantly, needs to be based on specific brand markers.

Emotional brand markers and exceptional client experiences create loyalty. A recent study showed that in luxury, approximately eight extraordinary interactions are needed to create loyalty, while less than two interactions below expectations trigger people to break up a brand. The brand story, as the “script” of the experience, therefore plays a pivotal role.

Luxury perception is highly individualistic and fluid, making it essential for brands to continuously engage with and understand the evolving preferences of their clients. In China’s fast-paced market, this means inspiring across every touchpoint, both physical and digital, and bringing the brand story across every single time.

China will continue to be a rewarding market for brands that embody and communicate their core values and brand story clearly and consistently and create cultural capital. The opportunity to influence and captivate the Chinese market is immense, but it requires a bold commitment to transformation and excellence.

Daniel Langer, CEO of Équité

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