Chinese move away from luxury commodities – Shaun Rein

Shaun Rein

Gone are the days when China´s rich moved to the same Gucci stores to purchase the same bling bags. For travel organizers these trends to individual choices creates a group of very demanding, but also very lucrative customers, says business analyst Shaun Rein in TTGAsia.

TTGAsia:

“(The Chinese) are spending more on experiences and are looking to travel to new and more exotic destinations,” he observed. “Destinations like Antarctica, South Africa and Canada are hot as they allow consumers to get back to nature and share those experiences on WeChat.” But while the Chinese are now widening the scope of activities on their vacations, the high spending powers still makes this group a very attractive one to tourism stakeholders. Rein commented that the Chinese are now moving from buying luxury products that can be bought by anyone else, to buying brands that show their individualism and creativity. 

“Over the past five years, the Chinese consumer...rushed to buy Louis Vuitton and other luxury items to show status that they belonged to the elite group,” he said. 

“This is changing... Bling is out, experiences are in, especially in international travel, but the spending is still there.”

More in TTGAsia.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more experts on China´s rich at the China Speakers Bureau? Do check out this list.

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Fighting for the Chinese consumer: the tax free threshold

Nederlands: Bijenkorf, (Photo credit: Wikipedia)

De Bijenkorf, one of the larger Dutch shopping malls, is trying to refocus its retail strategy on the international consumer, including the Chinese. Some of its stores in second-tier cities will be closed or sold off to Primark. We visited their store in The Hague and saw they made some progress, especially when it comes to tax free refunds, although it is still lagging on other points.
Most obvious missing from the current stores are some major brands, including Louis Vuitton,  Prada, Gucci and Pinko, to mention a few. Without a fair selection of those brands, all the rest might be in place, but what does it matter if you do not sell.
What works out well, is the free Wifi connection at the Bijenkorf, a must for Chinese customers since they have to consult with their friends back home real time before they can purchase good for themselves or their friends. (I mentioned this before here.)
What was a bit of a positive surprise was their tax free policy threshold. In most stores we visited non-EU citizens can get a refund of the VAT - a major draw for Chinese customers since they suffer back home from high taxes on luxury goods. Mostly you can only get your money back (that is how Chinese customers talk about tax refunds) if you spend at least a few hundred euro, sometimes even three hundred before the tax refund kicks in. Refunds only work in one store, so if you visit a store of the same brand, earlier purchases mostly can not be consolidated.
That might not be a problem if you sell expensive watches or diamonds, but when you core business is fashion, purchasing enough for a tax refund is hard. De Bijenkorf realized that and lowered their threshold to €50 euro. And the advantage was measured out loudly, even by Chinese announcement over their in-store speaker´ system.
It might be a trade off for the retailers. If consumers have to buy up to €300 worth of goods in your stores to get their fund, you might sell a bit more on items those visitors did not intend to buy. But if you offer your visitors a lower threshold, they might be more eager to come to you stores, especially if the neighbors maintain higher thresholds.
Getting some brands those Chinese visitors would actually want to buy, does help De Bijenkorf even more.

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Logo fatigue in China - Shaun Rein

Shaun Rein

Famous brands are losing their star status in China, as preferences of consumers shift, tells retail analyst Shaun Rein at Adage, in its 2014 of changing consumer trends in China.

Adage:

"Logo fatigue" has set in among China's consumers. Two brands known for insignias on their products, Louis Vuitton and Gucci, are "moving away from logos and trying to be more discreet in their designs," said Shaun Rein, founder of Shanghai-based China Market Research Group. 

"The problem is both of those brands still have a lot of people toting bags with those logos on them," he said. "The peasant who bought an LV bag three years ago is still going to be toting it for the next eight years." 

Mr. Rein cites Burberry, Coach, Miu Miu and Tiffany as strong performers in China. Brands have had success targeting "younger women, who are the most optimistic consumers right now," he said.

More in Adage.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form. 

Are you a media representative and would you get into touch with one of our speakers? Do drop us a line.

Jewelry, the next thing for Chinese consumers - Ben Cavender

Ben Cavender

Bag-seller Gucci bought a majority share in Chinese jeweler Queelin to enter a new segment of the luxury market. A smart move, says business analyst Ben Cavender in Business Week, as jewelry might be the next big thing for Chinese consumers.

Business Week:

Qeelin has 14 boutiques and its jewelry is sold in stores including Colette in Paris and Restir in Tokyo, PPR said today in an e-mailed statement. The transaction will probably close in January, Paris-based PPR said... 

“We’ve gotten to the point where Chinese consumers have had a lot of initial experience purchasing luxury products,” said Ben Cavender, analyst at China Market Research Group in Shanghai. “They are looking for the next step in terms of products and are not ready to buy haute couture full suits yet. Jewelery is a good next step for them.”

More in Business Week.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Ben Cavender is not always that positive about the moves foreign companies make. Last summer he talked about the failed efforts by B&Q, Dunkin Donuts, IKEA and Gap to localize their operations in China.

 

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Buying Prada suits, not shares - Shaun Rein

Shaun Rein

Prada is not doing as well as Gucci and Louis Vuitton in branding themselves in China, and Shaun Rein tells at CNBC why he would buy their suits, but not their shares. China might be skipping import taxes on luxury goods for stimulate sales, so having a decent retail operation in China is crucial.

Also: Shaun Rein expects China to become a world financial center faster than most think, with the Renminbi as a reserve currency.

More at CNBC

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Louis Vuitton strengthens brand at Beijing museum - Shaun Rein

Luxury bag producer Louis Vuitton has scored a major deal by cooperating with the Beijing National Museum, says retail analyst Shaun Rein in News Channel Asia. Linking to its own historical roots works very well in China.

"Louis Vuitton consumers are very interested in buying a brand with long-term heritage... and I think that's why Louis Vuitton is very smart to partner with the museum," Rein told AFP...

"Right now Louis Vuitton
is the dominant player but they are going to have massive problems in the coming five years" as people start to buy their second or third luxury handbag, said Rein.

"After you've bought Louis Vuitton or Gucci, do you go back to Louis Vuitton and Gucci or do you try something different?"

More in News Channel Asia.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting of conference? Do get in touch.

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How many Armani shops does Shanghai need?

Another building site

There is no doubt the market for luxury products is growing fast in China. A recent Hurun report documented just that. China counts almost a million millionaires, who seem to be willing to spend part of their capital on consumer goods. But luxury goods for the very rich are just a limited part of a very special market.
For the luxury market a lower segment of the consumers - some might call it the middle class - are needed to draw their wallets and let that industry run.
Early in my latest Shanghai trip I wondered already how all those new luxury stores in Huaihai Zhonglu would draw enough customers to make a living. Later I would be running into the International Finance Center(IFC) in Pudong, and next door the Super Brand Mall (that had forgotten about its troublesome start) and was now swamped with potential buyers.
And it did not stop there: I could not turn a corner or yet another shopping mall with new stores for Armani, Louis Vuitton, Hermes, Chanel, Cartier, Gucci were under construction. Obvious, every district in Shanghai - where most real estate related matters are decided - thought it needed a shopping mall like their neighbors.
For any count, Shanghai seems to be heading for a glut in the luxury market, and the situation might even be worse when the analysis of economists like Huang Yasheng are correct. Most of Shanghai's GDP is spent by the government, more than on wages for the Shanghainese who are expected to purchase those Gucci bags.
In the past I have been wrong more often, for example when the first waves of giant 5-star hotels moved into Shanghai. Initially, we could not imagine those hotel chains would survive. They did and perhaps only after the WorldExpo, there might be a bit of an overcapacity for 5-star hotels. But I still keep on wondering: how many Armani stores does Shanghai need?

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