Prada and Louis Vuitton find a renewed focus of investments in China in a bid to capture the country's millennials who are mostly the only child of affluent families and whose spending habits are less affected by the economic slowdown.
These 20 to 34-year-old demographics already possess the purchasing power to splurge on luxury brands from jewelry, handbags, shoes, and even high-end cosmetics mainly due to their unlimited access to their families' wealth. What is more interesting about these young Chinese is that they prefer to stay in China's second-tier cities which means that spending to set up headquarters will be less costly for any luxury brands.
In general, Chinese luxury shoppers spend more than $73 billion per year which is almost a third of the luxury market worldwide according to Reuters, citing data from McKinsey & Co. Revenue. The data also reflected that the Chinese millennials accounted for around 30 percent of China's overall contribution to the luxury brand industry.
After posting strong half-year earnings contributed primarily by Chinese consumers, Prada set up seven stores in Xi'an which is located in China's northwest. The luxury brand has built three stores for its Prada label, two stores for its Miu Miu brand, and for its Church's brand.
Louis Vuitton, on the other hand, set up a store in Wuhan. The brand has also teamed up with Baidu to use its facial recognition technology to attract shoppers to its first fragrance campaign in the country.
Gucci, Burberry, and Hermes have also posted impressive financial quarters that are attributed significantly to the Chinese shoppers. These sales happened amid the mounting China-US trade war.
Jewelry brand Chaumet has also opened a store in Wuxi, outside of Shanghai while Hermes is launching a store in Xi'an by September. The latter is also planning to launch its e-commerce site later this year while both Louis Vuitton and Gucci had their respective online stores operational since 2017.
The American luxury jewelry and specialty retailer Tiffany & Co, which is headquartered in New York, attributed its 28 percent revenue growth to the Asia-Pacific consumers, particularly to Chinese shoppers. In comparison, its revenue from North Americans and Europeans were only up by 9 percent and 17 percent respectively. Tiffany & Co makes its products available to Chinese consumers through Alibaba's Luxury Pavilion.
Meanwhile, Juliette Duveau of the marketing agency The Chinese Pulse is noting an emerging new generation of Chinese millennials which she described as independent, adventurous, ambitious, and more inclined toward cultural enrichment.
This demographic is comprised of young Chinese who are fond of traveling the less flamboyant places of Paris and instead opted for the off beaten track. This new breed of Chinese young wanderlusts now accounts for about 54 percent of Chinese tourists in Paris Duveau told South China Morning Post.
Li Lacampagne, the founder of AiShopping, added that these millennials preferred French labels that are not yet known in China.
