China’s Luxury Market Can Thank Generation Z for Recovery
China's Generation Z has become a driving force for the luxury goods sector, as many save on rent by living with their parents and are more interested in enjoying life rather than saving for big-ticket items like a home, a new report showed Tuesday.
An online survey of over 5,000 Chinese luxury goods buyers found that half of the Generation Z shoppers — those born after 1995 — spent more than 50,000 yuan ($7,200) on luxury goods in the 12 months through June, according to the report released by London-headquartered international consulting firm OC&C Strategy Consultants.
In comparison, only 32% of millennial shoppers (those who were born between 1980 and 1995) and 34% of Generation X (those who were born between 1960 and 1980) spent a similar amount on luxury products during the same period, it said.
Generation Z respondents appeared to be the least price-sensitive group of luxury shoppers, the report indicated. About 66% of them agreed with the statement that “price is not my main consideration, and finding items I like is most important,” whereas 48% of the millennial and Generation X respondents shared the same opinion.
Veronica Wang, associate partner at OC&C, said that most Generation Z youngsters live with their parents and therefore spend less on housing expenses. Generation Z members generally tends not to have a strong incentive to save money, and are more willing to pay for leisure and enjoyment, she said.
The consultancy said in the report that compared to older generations, Generation Z attach greater value to “character,” “personality” and “unique design,” as evidenced by their enthusiasm for independent designer brands such as Off-White, Vetements, and Supreme. Instead of getting what everybody else already has, they are keen on the latest in-season products so they can showcase their personalities, the report said.
Younger people are also more internet-savvy. About 59% of the Generation Z respondents have purchased luxury items online, while the percentage of the millennials and Generation X were 37% and 26% respectively, according to the report.
Many labels have jumped on the digital wave to reach out to young Chinese consumers as the sector showed signs earlier this year of a slow recovery from setbacks like the government’s anti-corruption campaign and weakening economic growth. Brands including Britain’s Burberry, French jewelry company Cartier, and Swiss watchmaker Tag Heuer have partnered with China’s e-commerce platforms such as JD.com and Tmall.com to open online stores, besides running Chinese-language internet shops on their own official websites.
Nonetheless, the penetration rate of online luxury goods shopping has remained low in China due to concerns over counterfeiting. Last year China saw a mere 9% penetration rate in online luxury goods sales, while the U.K. and the U.S. saw a 16% and 15% penetration rate, respectively, according to the report.
“The main challenge of e-commerce platforms in China is consumers’ trust. There are still 60% of luxury goods shoppers who have never purchased such items online,” said Wang. Some luxury brands were also hesitant about expanding on the internet given uncertainties such as the quality of the online shopping experience and whether the image of the e-commerce platforms really fit the labels’ branding, she said.
Sun Yafei, founder and CEO of luxury e-commerce platform 5lux.com, said that her clientele has a significant under-35 contingent.
“They’ve shown strong purchasing power, and they tend to favor entry lux items priced at around 1,000 to 2,000 yuan,” she said, adding that the company will target young customers for the upcoming Double 11 shopping spree in November.
Contact reporter Timmy Shen (firstname.lastname@example.org)
- 1China to Encourage Low-Emission Gasoline Cars Amid Green Push
- 2Hong Kong Allows Airlines to Restart Boeing 737 Max Flights
- 3China Sees Smaller Spillover Impact From Fed Moves Than Before
- 4In Depth: China’s Lagging Expansion of Medical Infrastructure
- 5Evergrande to Hire Advisers on Debt Risks, Creditor Demands
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas