9/17/2023 0 Comments Jing daily newsletter![]() ![]() While communication channels, consumer interests, and popular culture may evolve, Wang explains that the core values luxury brands offer, such as extraordinary experiences and high social identity signaling value, remain consistent. “Brands must identify the platforms, content, and media preferences of their consumers in order to effectively communicate with them,” she says. Wang Yajin, a professor of marketing at China Europe International Business School (CEIBS) based in Shanghai, stresses the importance of understanding where “target consumers spend their time,” especially in China’s digital and mobile-dominated consumer market. Instead of focusing on selling and data collection, brands should leverage social media platforms such as WeChat, Weibo, Xiaohongshu and Douyin, and live-streaming and mobile games to foster a sense of community and interactivity. McKinsey suggests that luxury brands need to adopt a different approach when targeting Chinese millennials. Social media engagement trumps data collection “From products to communication to branding, luxury has progressively evolved to a younger sector, and to cater to ever younger consumers.” “The future has always belonged to future generations, and now they even shape it,” Siboni says. Siboni points out that China’s post-1980s generations already accounted for more than half of Chinese consumer spending on luxury in 2018. Ī more youthful market will disrupt luxury’s growth path, says consultancy firm Bain in a 2018 report, which projects that millennials and Gen Z (born between 19) will compose 55 percent of the global market by 2025. “Chinese millennials and Gen Z are instrumental in the success of luxury brands in the world, even more so in China,” Jonathan Siboni, founder and CEO of Luxurynsight, a Paris-based data intelligence firm, tells Jing Daily. According to industry experts, these two demographics will comprise a significant portion of the market in the next few years.īy 2025, millennials (born between 19) will account for 40 percent of the global personal luxury goods market, according to a 2017 report by Bain & Company and Farfetch. This was largely attributed to a rebound in brick-and-mortar traffic following China’s lifting of Covid-19 restrictions, heightened demand around the Lunar New Year, as well as investment in localizing its operating model.The future success of luxury brands in China relies on their ability to effectively engage with the nation’s millennial and Gen Z consumer groups. In the three months ended February 28, 2023, Nike saw a slight improvement in the country, where its revenue climbed 1 percent on a constant currency basis (down 8 percent on a reported basis). In the fiscal year ended May 31, 2021, the company recorded its seventh consecutive year of double-digit, currency-neutral growth in Greater China. The Jing Take: Prior to the Xinjiang cotton controversy, Nike’s business in China was booming. ![]() The Zacks Rank system, which ranges from one (strong buy) to five (strong sell), ranks Nike three (hold). Given these factors, analysts suggest that investors avoid investing in the sportswear name. Meanwhile, in the fiscal year ended May 31, 2022, Chinese competitors Li-Ning and Anta achieved quarterly sales growth of 15 percent or more while Nike’s Greater China sales growth remained negative - down as much as 24 percent in the company’s Q2 2022 (ended November 30, 2021). ![]()
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