Brands Spending Heavily On Advertising, Brand Messaging To Maintain Strong Growth In Competitive Developing Markets
This week, the Luxury Institute published its list of the top luxury brands in China, as ranked by Chinese high-net-worth consumers. While the results are not terribly surprising — as the “Best of the Best” probably don’t differ dramatically from any other major luxury market — it is still important to see that traditional favorites like Louis Vuitton (for women) and Dunhill (for men) have slipped a bit. This (to me, at least) gives an indication that brands which have developed strong footholds in the Chinese market throughout the late ’80s and ’90s are giving luxury shoppers in China a bit of “luxury fatigue.”
Possibly driven by younger luxury shoppers in the cosmopolitan east (where consumers are generally more trendy as well as picky), the split between brand lust in first- and second-tier cities must be growing nearly as fast as the advertising expenditures. Unfortunately, the Luxury Institute’s results do not break the survey down into regional variations, so I’m basing all of this on my own observations and opinions.
According to this press release, the Luxury Institute divides its rankings into six categories: Women’s Fashion (29 brands), Women’s Shoes (18 brands), Handbags (27 brands), Men’s Fashion (25 brands), Men’s Shoes (25 brands) and Automobiles (20 brands). As for rating criteria, the Institute asks high-net individuals to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected. I have no data on the cities of origin of respondents.
According to the Institute, however, the survey is relatively large, made up of “a national sample of 600 wealthy Chinese consumers, with a minimum household income of 1 million Chinese Renminbi (or 147,000 U.S. Dollars) and an average household income of 381,000 U.S. Dollars.” The survey was conducted online.
The “Best of the Best” are: (LBSI score out of 10)-- Women's Fashion -- Prada - 8.77 -- Yves Saint Laurent - 8.75 -- Hermes, Gucci and Dolce & Gabbana (tied) - 8.68 -- Women's Shoes -- Ferragamo - 8.69 -- Gucci - 8.66 -- Hermes - 8.64 -- Handbags -- Hermes - 8.93 -- Lulu Guinness - 8.77 -- Ferragamo - 8.76 -- Men's Fashion -- Giorgio Armani - 8.74 -- Louis Vuitton - 8.68 -- Dior Homme and Paul Smith (tied) - 8.54 -- Men's Shoes -- Louis Vuitton - 8.66 -- Versace - 8.51 -- Giorgio Armani, Brian Atwood and Gucci (tied) - 8.48 -- Automobiles -- Porsche - 8.79 -- Mercedes-Benz - 8.72 -- BMW - 8.70
Again, though there are few surprises in this survey — with Porsche and Prada ranked so highly — I am interested in some of the third place rankings, thinking specifically of Paul Smith for men’s fashion, and Lulu Guinness for women’s handbags. These brands typically appeal to slightly younger demographics (late 20s-early 40s) than brands like Ferragamo or Yves Saint Laurent, who are often popular with middle-aged consumers.
If nothing else, this survey does indicate that luxury brands cannot afford to rest on their laurels in the Chinese market. Even brands with a relatively long presence in China — Gucci and Hermes among others — showed less of the dominance then they perhaps would have a few years ago, indicating that the tastes of Chinese luxury consumers are not something to be taken for granted.
In coming years, as home-grown mainland luxury brands (or brands from neighboring Asian countries) gain momentum and as consumers become increasingly sophisticated and picky, European luxury brands will no longer be able to assume they can maintain their dominance of these rankings without some continued effort. In the end, this could be a good thing for the Chinese market, leading to unique, China-only collections as designers vie for consumers’ yuan.