Luxury Consumption Survey- China Slows but US booms!

Luxury Consumption Survey- China Slows but US booms!

Agility Research & Strategy, a leading research firm on the luxury and affluent consumer uncovered in its latest survey key findings on the luxury consumption trends amongst American and Chinese consumers.

Key highlights are that the way affluent Chinese consumers think about and buy luxury products does differ from their US counterparts. – Agility Research & Strategy takes a deeper look into the psyche and luxury brand consumption patterns of the top 25% (based on household income) of the two populations in both markets and surveyed over 3000 consumers over Oct 2014 across the US, China, HK and Singapore.

Key Insights from Agility Research & Strategy Latest Luxury Trends Survey:

What does luxury mean in the US?

Amrita Banta, Managing Director of Agility Research states “ Generally, affluent consumers in the US are more engaged with brands in their daily lives, with many products and services with carefully designed brands.”

She further added: “In this hugely competitive environment it is not surprising that US consumers do not view luxury as much in terms of individual brands, but rather think about luxury being expensive, high price purchases in general.”

Some brands associated with a high price, like cars (e.g., BMW, Mercedes Benz, Cadillac), come up when asked ‘what comes to mind when someone says luxury?’ However, associations are mostly related to expensive categories, e.g., jewellery, a house, a vacation, or car (see word cloud below). They also expect quality, and comfort and pampering from luxury products and services.

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What does luxury mean in China?

In China, the affluent population tends to be younger and more eager to show off their status in society by flaunting fashion items from the top European fashion houses. Overall, for the affluent Chinese, quality is actually seen as defining luxury more than the price of purchase. Luxury is expressed in one’s style and taste in high-end branded products that work as status symbols. Many individual fashion brands, such as Chanel, LV, and Hermes get mentioned, but similar to the US, some car brands surface, such as, Ferrari and BMW. Being expensive alone does not define luxury as it does in the US.

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What drives luxury product purchases in each market?

Something that we already referred to is that affluent consumers in China are more likely than in the US to go for luxury brands that are recognizable. 56% of Chinese consumers say that they agree (completely or somewhat) that it is important to them that people recognize the brand they are using.

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Luxury brands in both markets are purchased because they are of higher quality. However, quality is a notably bigger motivator for purchasing luxury in China than in the US. In fact, only 4% in China disagree with the statement that they buy luxury brands because of the higher quality that they provide.

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There is an even bigger discrepancy between the markets in terms of exclusivity driving luxury brand purchasing. In China 86% of affluent consumers agree that they buy luxury brands because of their exclusivity, while only 51% say the same in the US.

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Price on the other hand is a much bigger consideration in the US that in China. Almost 3 out of 4 US affluent consumers say that it is important for them to get the best possible price when buying luxury brands. This compares to less than 1 in 2 in China saying the same.

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Despite their interest in getting the best possible bargain for their luxury purchase, US affluent consumers somewhat lag behind their Chinese counterparts in terms of purchasing luxury products online, with only 50% agreeing that they purchase luxury products online, versus 59% in China.

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Chinese affluent consumers have been much faster to adopt the internet as a channel for purchasing, and over 80% agree when asked if they research luxury products online. This compares to only 65% in the US.

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What brands do affluent consumer own and plan to purchase in each market?

Top fashion brands owned by the Chinese affluent are more upscale than those in the US and include Chanel, Gucci, and Burberry, while in the US it is more common to own more affordable luxury brands, such as, Coach, Ralph Lauren, and Calvin Klein.

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The top watch & jewellery brands that Chinese and US affluent consumers own are both upscale, with more local support shown by US affluent consumers in owning pieces from Tiffany & Co. and Guess.

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When it comes to top cosmetics brands on the shopping list of affluent consumers, French names are in the top three. However, you also see a lot of regional influence – in China you see Japanese brands, Shiseido and SK-II also on the list, while in the US, local brands Olay and Clinique top the list.

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About Agility Research & Strategy

Agility Research & Strategy (www.agility-research.com) is a leading research and consulting agency with a core expertise on the Affluent market. With 30 years of combined experience on understanding the Affluent consumer, the team at Agility Research & Strategy has helped our clients gain valuable insights on Asian consumers across verticals. Over the years we have developed expertise in how to best tap into hard to reach target audiences for our clients. Our researchers are frequently quoted and published in various media, establishing our position as experts and thought leaders on the luxury market. Agility Research has launched Affluential.com, the Worlds’ first DIY online survey platform to reach Affluent consumers across 20 key markets.

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