I don’t normally write about this specific topic: luxury brands in China. But when you’re talking about the amount of money at play here, that caused me to sit up and take notice.
Earlier this year Bain & Co. released a report which showed that luxury items such as designer handbags and fine jewelry will see an increase of 2-4% to as much as $290 billion in 2017 alone. Now that figure represents China and Europe but pulling back the curtain on the report shows that the increase is predominantly coming from “the growing appetite for luxury indulgence among the Chinese consumers.”
There are brands such as Alibaba, who recently launched the Luxury Pavilion, an invite-only platform strictly for top of the line brands that are specific to their T-mall business-to-the-consumer venue — that are fully aware of this expected increase.
But there might be trouble ahead for luxury brand e-marketing. Forecasters predict that the global market for luxuries, while still strong, is starting to plateau out — with an annual growth rate averaging around just 3% . That’s a lot slower than in the previous halcyon days of luxury e-commerce in China. One of the big problems is that the top luxury brands have traditionally been kept back to a modest quarter of all brands being offered online, while everyday consumer products have been pushed forward at a level near 100%.
This was perceived as playing to the Chinese sensitivity to displaying great wealth without grace and discretion. But that kind of thinking has got to be revised, even jettisoned, if e-tailers are to cash in on the burgeoning Chinese hunger for the good (and expensive) things in life.
Right now the best bet for bottom line returns in the Chinese luxury market is luxury travel. The whole country, it seems, can’t wait to travel overseas to see relatives, visit shrines, escort their children to ivy league colleges, and spend their money on items that the Chinese government has slapped with terrific import taxes, but which, if bought overseas, can be brought home without much fuss. Online luxury travel providers now have a golden opportunity to tap into this vast market, if they are savvy.
Here are the key steps in taking advantage of that hungry urge to travel in style:
It must be exclusive
The Chinese sense of entitlement, after so many years of bleak utilitarian economics, is especially strong when it comes to purchasing unique, one-of-a-kind travel experiences. According to Blue Lanka Tours CEO Mr. Dines N Perera, “Whether by plane or train or ship or bus, the money is literally no object to traveling Chinese as long as they feel guaranteed their excursion is completely unique and exclusive. Promise them a trip that cannot be duplicated by any other travel consortium, and you’ve got a gold mine.”
It must be personal
There’s no such thing as a tour guide on a luxury brand junket. ‘Personal’ guides are expected to know each individual’s name, where they’re from, what they do for a living, and what specifically they expect out of the trip. All excursions are personalized on a small group consensual basis, and are definitely never rushed from one place to another. The guides are usually experts in helping guests get the right amount of sleep, exercise, diet and any other special needs requirements.
Make it multi-channel
More and more, luxury online travel arrangements for mainland Chinese are being handled by one company, to limit the confusion of their customers and prevent them from being distracted by too many options. Alibaba, for instance, provides upfront luxury travel service that guarantees all aspects of the trip for customers — and then deals with subsidiaries like Fliggy, breaking down the travel itinerary into all the dreary details that rich travelers don’t want to deal with personally. It’s a win-win for the customer and the travel brand.
By Courtesy Forbes