Comment: The rise of the travelling Chinese consumer
A shift in Chinese travelling habits has granted UK retailers access to a growing group of consumers demonstrating an impressive display of spending power, coupled with a voracious appetite for luxury items. By David McCorquodale
In a recent study by KPMG, which interviewed 1,200 Chinese consumers across 24 cities in China, 71% of respondents said they travelled overseas in 2012, up from 53% in 2008. The majority (72%) said they purchased luxury items while abroad, favouring cosmetics, watches and bags. In fact, those questioned said that they preferred to buy luxury goods overseas, where they can access broader, and sometimes newer, selections.
This is the chance for luxury retailers in the UK to catch a much needed break. This group of brand savvy international consumers has cash to spend and favours established, heritage, brands.
Time is of the essence. British luxury brands need to market and sell to this burgeoning consumer group and interact with them before rival European counterparts storm ahead and build relationships with them.
This is a particular opportunity for smaller brands to break into China. This group can be locked out of international opportunities due to the high costs involved in opening up new overseas markets. The trend for Chinese consumers to shop abroad enables these smaller brands to sell to them from the safety of the UK, with the ultimate aim to subsequently sell to them online once the shoppers return home. Retailers can subsequently use this online sales data to better understand demand from China in their products, before committing with bricks and mortar.
Larger retailers with a flagship store in China could benefit by using the store to build brand recognition, and use it as a foothold to help build international and online sales.
Having a clear and consistent digital strategy will also unlock access to the middle class Chinese consumer, who statistics show actively wants to engage with retailers online; 70% of those surveyed said they searched for luxury brands on the internet at least once a month in order to learn more about the individual brands and their products.
But a word of warning, these multiple channels which stretch across the globe mean luxury players must maintain a strong brand image, and develop synergies in their marketing and product selections in their stores in China and overseas and across their online platforms.
Branded players must also make sure they stay true to their heritage, especially when making small tweaks to suit the local market and culture. If they license out the brand, this becomes especially crucial to ensure the licensee does not dilute the brand’s strength. These global consumers will see the different incarnations of a brand across the world, and will expect it to be consistent and live up to their expectations.
In the current economic climate, these international shopping tourists provide a significant opportunity to grow sales and connect with a burgeoning new consumer group, who have cash to spend. Tapping into this vein and effectively showcasing their wares could afford retailers the chance to build a long term mutually beneficial relationship with consumers overseas.
David McCorquodale is UK Head of Retail at KPMG
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