4 Aug 2014
Mainland Luxury Consumers Go "Bespoke" as High-end Market Matures
'Customised', 'personalised' and 'bespoke' were the watchwords at the recent Luxury China expo in Beijing, as signs are becoming increasingly apparent that many of the mainland's ultra-rich consumers now hanker for the truly unique.
"Bespoke luxury" is set to be the new trend in the increasingly affluent mainland market. According to a number of analysts, better-off consumers are disillusioned with the growing homogeneity of high-end luxury products – in terms of design, function and style – and are now looking for more one-off and customised items.
This growing penchant for bespoke luxury relates to a distinct consumer preference for high-end niche products that are somehow unique or specifically tailored. This increased sophistication is in line with statistics that show that China is now, arguably, the largest market for luxury goods in the world.
Bespoke on show
The largest exhibition of its kind in Asia, Beijing's Luxury China event this year focused on both "high-end" and "bespoke luxury". The event attracted more than 300 international high-end brands from some 20 countries – including China, Italy, France, Switzerland, US, UK and Germany. It also featured a wide variety of products – notably luxury cars, handbags and luggage, leather goods, premium real estate, lavish travel packages, furniture and artworks. A significant number of global brands – including Ferrari, Maserati, Lamborghini, Harley-Davidson, Vertu, Hermès, Chanel, Gucci and Louis Vuitton (LV) – participated in the event.
Some 856 high-net-worth individuals were personally invited by the event's organisers, leveraging on their connections with 12 private banks in order to boost attendance. The organisers also worked closely with 286 premium lifestyle clubs – in the jet, yacht, luxury car, golf, equestrianism and fine wine sectors – in order to secure the right profile of attendees. Promotional activity was also carried out via 49 five-star hotels in Beijing, 11 entrepreneur associations and hundreds of high-end media organisations. As a result, Luxury China attracted some 10,000 industry figures and luxury goods patrons.
Luxury gets personal
According to the Fortune Character Institute, the global consumption of high-end goods hit US$217 billion in 2013, a new record. Perhaps remarkably, this indicated a growth rate of 11% in the sector, despite the perception of an overall slowdown in the world luxury market. In total, Chinese consumers bought 47% – or US$102 billion worth – of all the luxury goods purchased in the world last year. This breaks down into US$28 billion of local consumption and US$74 billion of overseas consumption.
With purchasers developing a more mature consumption mentality, however, China's high-end goods market is undergoing something of a transformation – the aforementioned move toward bespoke luxury. Confirming this change, a Mr "Zheng", the Manager of a Beijing-based luxury clothing and leather goods company, said: "Our clients used to be enthusiastic buyers of international luxury brands but, in recent years, they've exhibited a growing interest in taking more of bespoke approach."
According to Zheng, his company has a distinctly VIP customer base. Aside from purchasing from him, many of them are regular patrons of LV and Hermès. Today, though, he says, many of these consumers are increasingly turning to tailor-made products in pursuit of a genuinely unique experience.
Commenting on the factors driving the bespoke movement, one attendee at the fair said: "On several occasions, a number of affluent consumers have been unhappy to notice they were dressed in the same outfits as other attendees at events. This was distressing to all parties."
One Italian participant at the fair, a resident of China for several years, said: "In light of this, consumers now often request designers to produce a unique product based on their own requirements. This is despite the fact it can double the cost."
International brands on show
Among the international brands exhibiting at Luxury China was Maserati, with the Italian carmaker launching three new luxury sport sedans at the event – the eighth-generation Quattroporte V8, Maserati's first-ever mid-size four-door luxury sports sedan Ghibli and the sixth-generation Quattroporte V6. The launches saw several potential buyers lining up to place orders.
Similarly popular, was Harley-Davidson, the classic motorcycle brand. The US exhibitor chose the event to showcase its 2014 Harley-Davidson limited edition, said to represent the ultimate in high-end premium riding and one which they rightly believed would appeal to Chinese consumers.
Away from the vehicles sectors, several attendees were clearly impressed by the new high-performance smartphone on offer from Vertu, the UK-based luxury mobile manufacturer. Plaudits too for notable successes from Bang & Olufsen (with its "symphony hall" sound system), Dolby (with virtual surround sound effect Dolby Digital Plus technology), as well as Hasselblad's range of premium camera lenses. High-end jewellery from around the world was, of course, well-represented.
Amid the many brands on offer, though, a number of commentators saw clear indications of a move toward bespoke luxury, with several companies looking to integrate the concept into their marketing initiatives. Such a move for Chinese consumers follows the well-trodden path taken by purchasers in other affluent markets, notably Europe and the US.
Service without a smile
One obstacle to this trend, though, was widely acknowledged to be service quality. One exhibitor, a "Ms Chen", said: "Service quality has long been the major factor hindering the growth of China's luxury market. There is a huge disparity between the service standard offered by domestic companies and that offered by their overseas counterparts. This is particularly apparent with regard to the shopping experience, in-store service and the after-sales services. The higher quality of shopping services and environment available overseas are driving more consumers to shop abroad for luxury goods."
Chen, herself, regularly travels abroad, frequently visiting high-end luxury retail outlets. She believes overseas companies provide more elegant shopping environments, better-trained staff and better facilities compared to mainland stores.
Even the dedicated global brand outlets on the mainland, Chen believes, are inferior to their overseas equivalents, particularly with regard to price and quality of service. She was, however, encouraged by the growth of the mainland local high-end boutique sector over recent years. Typically taking more of an interactive approach, such establishments allow designers and customers to work together to create highly individual products – perhaps the ultimate manifestation of bespoke luxury.
As well as pressure from the bespoke side of the market, the continued problem of counterfeiting is also undermining luxury brand sales in China. With first-tier luxury brands inevitably suffering the most, concerns over provenance has alienated some consumers and provided a further spur to the bespoke sector.
With consumers concerned that they may be squandering tens of thousands of Rmb on a fake – one worth no more than Rmb1,000 – some purchasers are opting, instead, for the relative reassurance of the bespoke sector.
Commenting on the trend, one attendee at Luxury China said: "Counterfeit products cause huge damage to a brand. For customers that are partial to a particular brand, however, the bespoke route may prove a viable alternative, ensuring both individuality and genuine quality."
Luxury China 2014 took place at the Beijing Exhibition Center (BEC) from 4 to 6 July.
Xu Lin, Special Correspondent, Beijing