How are businesses targeting Asian luxury consumers during the pandemic?
It is no secret that COVID-19 has thrown a wrench in the works of many businesses worldwide, and some industries, such as international tourism, have been brought to a grinding halt. The luxury market has not been spared either, especially because Chinese travellers, who make up a significant percentage of the target demographic, could not leave the country and indulge in overseas spending.
In 2020, the global luxury market was valued at US$285.1 billion, a significant drop from 2019, where it stood at US$316.16 billion. It is expected that by 2025 the market worth of this industry should reach approximately US$388 billion. However, this figure is subject to the ongoing pandemic and when borders will begin to open up to international travellers. It is also expected that the Asian market, led by Chinese shoppers, will be paramount for the luxury market’s recovery from the major setbacks imposed by the pandemic.
To mitigate the situation that luxury businesses are facing currently, some brands have taken to novel marketing strategies to engage Asian consumers. For example, in August 2020, Burberry was the first high-end brand to launch its own range of face masks, riding on the global wave of the need to cover up. The masks were priced at US$120, and Burberry stated that 20% of the proceeds generated from mask sales would be directed to the Burberry Foundation COVID-19 Community Fund.
Following suit in September 2020, the high-end brand Louis Vuitton launched a US$961 face shield which features the brand’s signature monogram. The face shield, which doubles up as a visor, is designed with transition lens technology that allows it to go dark in sunlight. The brand also offers a knitted face mask for its luxury consumers. Offering luxury products associated with the pandemic can be seen as a technique of product diversification by the brands, as these products would not have been included in their repertoires under normal circumstances.
While luxury brands are conservative with their operations in other parts of the world, especially Europe, they are ready to invest and launch new stores in Asia, especially China, which held approximately 35% of the luxury goods consumer market before the pandemic. As of November last year, at least eight brands, including Chanel, Cartier, and Givenchy, had launched brick-and-mortar shops at airports around China, including domestic terminals. Bringing their luxury goods to the doorstep of Chinese consumers indicates the confidence that these luxury brands have in Chinese markets.
Understanding the spending power that Chinese consumer markets have, several luxury brands have directed their focus towards the Asian region. In December last year, Gucci announced the launch of two online flagship stores on Alibaba’s luxury shopping platform Small Luxury Pavilion in a bid to continue wooing Chinese luxury spenders. This is in addition to having a dedicated Gucci website for the Chinese market and jumping on a range of Chinese social media platforms, such as Weibo and WeChat.
Before the pandemic, many luxury brands avoided selling their products online as it was thought to diminish the prestige of the brand. However, to reach a target audience who are unable to visit their brick-and-mortar stores in person, luxury businesses have had to embrace the age of digitalisation and online shopping to keep their businesses going. If anything, the pandemic has highlighted the need for luxury brands to move away from normative marketing strategies to generate sales, especially during a crisis, and to adapt to global society’s prevalent use of technology for shopping.
ChinaAsiaLuxury brands AsiaLuxury businessCovid19Asian luxury consumersLuxury brands and pandemic