In a strategic evolution, leading global luxury brands are redirecting their focus to China’s elite consumers, redefining the dynamics of exclusivity. Influential figures like Diana Wang, a prominent investor and owner of a Shanghai-based fashion label, epitomize this coveted demographic. As luxury brands adapt to China’s post-pandemic economic shift, they are steering away from the once-dominant middle-class market, concentrating efforts on a select group known as Very Important Clients (VICs).
The absence of a robust luxury rebound post-China’s pandemic reopening has sparked investor concerns, evident in stock declines for industry leaders such as LVMH and Richemont. To counter this, brands are shifting gears, emphasizing the sale of fewer, high-value items and leveraging the 5% of luxury consumers contributing over 35% of sales in China, as indicated by HSBC analysts.
Exclusive perks, including private sales, intimate events, and meet-the-designer gatherings, have become pivotal strategies. This marks a departure from past practices in China, where mass events aimed at raising brand awareness took precedence. From Chanel to Richemont and Kering, luxury retailers are now vying for the discretionary spending of the wealthier demographic still keen on indulgence.
«It’s not only about advertising and communication,» emphasizes Jean-Marc Duplaix, CFO and Deputy CEO of Kering. «It’s more broadly about how we engage with customers.»
Creating an intimate and exclusive experience is central to this engagement. Events hosted by Tiffany, Versace, Gucci, Chanel, and Dior are carefully curated, featuring celebrities and historic venues for a select few. Exclusive retail spaces and a strong focus on local culture further underscore this refined approach.
Despite economic uncertainties, luxury brands maintain optimism about China’s potential, projected to represent nearly 40% of global luxury sales by 2030. While geopolitical tensions prompt some industries to reduce their presence in China, luxury brands affirm their commitment, viewing the medium and long-term development potential as robust.
As China’s economic landscape undergoes adjustments, even Very Important Clients like Diana Wang approach luxury purchases with more consideration. This shift in consumer mindset presents an opportunity for retailers to refine the allure of their brands and maintain desirability in evolving economic conditions.
