Predictions for the Chinese luxury market in 2020

2019 was a series of brand missteps in the Chinese market. From Versace and Coach to Tiffany and Dior — all long beloved by Chinese customers — brands have been heavily criticised for cultural insensitivity towards China. Given this, we expect brands will be even more attentive and attuned to local consumers. Cultural sensitivity should be a kernel that forms with brand decision-makers and is adopted company-wide. However, as important drivers in the process of localisation, brands’ local team and Chinese staff will have more of a voice when it comes to domestic matters.

Luxury brands faced challenges from niche brands and more D2C (direct to consumer) brands, which reflect the new wave of consumer demand among the younger generation during 2019. Digitally-native brands like Warby Parker, Everlane and Glossier will become the new luxury — even though their products are not so different from the brands they are disrupting. Their formulas, which include a distinctive DNA, grass-root marketing, and constant revision of product formula due to consumer demand, are drastically different to luxury brands that have a controlled brand image, precise merchandising and trendsetting design.

In China, home-grown brands and Taobao [a Chinese online shopping website] vendors will react to consumer brands both in design and customer service terms. Already, local brand Perfect Diary communicated with consumers and reacted to the latest social trends by dropping special editions. While luxury brands may not become entirely D2C, they can utilise their marketing strategies. User-generated content will become an irreversible trend, whether that’s in customised products or social media engagement. This fits the soft ownership concept among Gen Zers — even if they purchase, they want to co-create with brands and seek out products they can put their spin on.

Benefitting from China’s ‘Reform and Opening’ policy, and the country’s increasing globaliaation, Chinese millennials and Gen Zers are surrounded by fluctuating technology and concepts. They are, therefore, far more open to novel ideas than previous generations. For example, Chinese citizens are now more welcoming to the concept of gender binary; when unisex style emerged in China 15 years ago, the lack of boundaries between females and males was heavily criticised, whereas now it is more tolerable. Trends are now moving towards gender-inclusivity and as brands like Supreme, uncovered by millennials, go mainstream, exclusivity, diversity, and authenticity will be the keywords for future Gen Zers.

The rental fashion and luxury resale market in China will keep growing. Young Chinese consumers don’t attach a stigma to second-hand goods and set less ownership towards commodities. Moreover, issues such as sustainability, affordability and a move towards retro-design aesthetics, will entice younger generations to opt for pre-owned goods. Inspired by this, luxury brands, too, will look to their archives and launch iconic re-editions of past designs. In turn, Jing Daily predicts brands will devote more attention to their vintage collections and control distribution as it will validate their full-price goods.

5G’s impact on the fashion industry will be far-reaching and fast, in particular in China. Accelerated internet speeds will bring drastic changes to shoppers’ experiences online, while the use of live streaming and AR [augmented reality] or VR [virtual reality] will become more mainstream, acting as an important tool to help consumers make purchasing decisions. Smart retail will continue to underpin offline experiences — Gucci and Burberry both signed strategic partnerships with Tencent to combine social media and retail.

*This article was originally published by the much-respected JING DAILY, a Moodie Davitt Report content partner.