Luxury is defined by essence as a rare good, which would not be accessible to all. Digital is synonymous with accessibility, making digital and luxury opposites difficult to mix. It is however the biggest challenge for luxury brands to penetrate the Chinese market, whose culture and consumption habits are based on digital.
Chinese millennials as a risky target
Trying to target millennials is a rather risky strategy, and for good reason: millennials are not necessarily high net worth individuals, their parents are. In countries with strong economic development like China, there is a risk of falling into an infernal spiral of debt and loan. Finally, millennials are becoming more and more loyal to a particular brand or style, making it a difficult target to reach for new brands.
Luxury knows no crisis
The level of attention of young people is clearly decreasing; indeed, the average continuous attention was around 12 seconds in 2000 against 8 seconds currently. Luxury brands must therefore constantly redouble their inventiveness to capture the attention of their targets. This observation has seen the birth of new technologies such as SNBN or “See Now, Buy Now“, a technology making it possible to buy a product directly broadcasted live.
Digital at the heart of any retail strategy
Retail can be greatly accelerated and facilitated thanks to digital; it is increasingly important for brands to seek to create a real bond with their customers. For this, digital is the ideal means because it allows brands to position themselves as direct influencers. Getting closer to its customers really involves them in the storytelling and leads them to purchase in a more natural way. A good digital strategy also increases the audience’s loyalty to the brand.
Content takes up considerable space
Attention is a battle that companies must constantly fight to attract the interest of consumers. All brands are redoubling their inventiveness in the hope of reaching their target, and all the customer journey touchpoints must be considered. Digital technology considerably increases these touchpoints, which were previously reduced to physical store visits, advertising, and word of mouth.
The importance of the Chinese emotional calendar
Brands often make more profit on the Internet than in physical stores in China. 11.11 for example, called “double eleven” or “Single’s Day” is a marketing operation created by China to encourage singles to spend for them. It is the largest e-commerce event in the world, gathering more than 250 billion users in 24 hours for a total of $37 billion in sales in 2018. Organized by the e-commerce giant TMall, Alibaba’s platform, this event is an opportunity for everyone to spend their savings as the promotions offered are attractive.
E-commerce can also concern luxury
TMall has a dedicated place for luxury brands, called the “Luxury Pavillon“; this space allows luxury brands to make as many sales as other brands during the double eleven. If this choice divides, it allows houses to increase their brand awareness while increasing their sales and their number of customers. Making brands more “accessible” to everyone through e-commerce is controversial, as digital takes away this dimension of exclusivity and dreams, yet characteristic of luxury.
Everyone can go digital
In China, everything is digital and it does not pose a problem for anyone to buy a luxury watch or a car in a few clicks as anyone would buy a coffee. Chinese consumers are increasingly fond of buying luxury online because they have less and less time to shop. Thus, there are no longer any real barriers for luxury brands to bet on digital in order to seduce Chinese consumers.
The most effective strategy to overcome this confrontation between accessible digital and exclusive luxury is O2O, or “online to offline“. With this strategy, brands can create interest, and the desire to buy thanks to digital then attract consumers to their stores to live the luxury experience. This strategy is also effective in the other direction; customers may want to locate a product in the store and then buy it on the internet when they are ready to.
They thus increase the chances of finding interesting offers online and can also have full knowledge of the product, its colors, its smell, and its touch… offline. In summary, digital is the best ally of any e-commerce strategy, and luxury brands seem to have understood this well. Any brand wishing to set up in China must, therefore, consider e-commerce as a basis for its strategy in order to meet the hoped-for success on this singular market.