Boston Consulting Group studies the luxury market and the consumer behavior regularly. Their latest report on the subject highlights a distinct shift in the attitude of the luxury consumer. The definition of luxury for the consumer is increasingly shifting to ‘being than ‘having’. Affluent Chinese consumers who make up a significant section of the consumer base are also following this trend. ‘Experiential’ luxury has been on the rise among the world’s wealthy. Handbags, watches and jewels have been traditionally been the focus of the luxury market but are now facing competition from exotic holidays, gourmet meals, and art auctions. Experiential luxury today contributes over half of the revenue globally for luxury goods and services.
70% of Chinese Consumers Prefer Hard Assets
This segment of the luxury market is growing at 14% which is faster than the growth of the overall market which is helping it increase its share in the luxury market. Enriching experiences have become the preferred choice of a growing number of consumers worldwide. However, in China, a majority still go for hard assets to flaunt their wealth and success. Material luxury still holds a greater share in all the emerging market. But these markets are also following the same trend. The annual growth of luxury experiences in China last year was recorded at a significant 15%. A Chinese consumer recently spent $1.5 million on a luxury travel package.
Young Affluent Chinese Prefer Experiential Luxury
The Chinese luxury consumer can be divided into three broad categories; successful entrepreneurs, newcomers, and the younger “sugar generation.” It is the younger generation who have been born in wealth are more interested in experiential categories of luxury such as travel. At present they constitute 13% of China’s affluent population but are projected to become 30% of the luxury consumer base in the next five years. The prominent luxury brands are adapting to the trend and creating experiences around their products. Louis Vuitton now has an invitation only floor in their ultra luxury ‘Maison’ shop at Shanghai. It is designed as a luxurious private residence where customers can receive hair styling while an artist creates a personalized bag for them. The trend is sure to gather further momentum in the coming years.