In Dec 2016, a report published by Euromonitor International on Luxury Goods in Italy states that growth of luxury goods in 2016 was slow as compare to previous year. This was reported based on two reasons; firstly, Italian luxury products were bought by consumers belonging to higher income group only. Secondly, Italy is among countries that are facing highest levels of income disparity. However, sales of luxury brands in Italy were benefited by rise in luxury shopping tourism, with Chinese tourists notably supporting sale growth. Although, overall growth remained slow due to maturity in many areas.
Focus on Chinese consumers with a strong Digital Strategy
China is developing as first luxury market, on grounds that nearly 20% of global activity in this sector is influenced by Chinese demand, and growth potential is high. It is boldly expected that Chinese middle-class, currently representing between 6% and 10% of the population, will grow to 50% within the next 10 years, provocatively affecting the purchase of high range products.
80% of Chinese buyers are under 45 years of age. They are highly fascinated by western brands and have high internet consumption. Therefore, the most suitable way to reach this buyer group is through internet. With a 45.8 % of internet penetration, China has the biggest online population representing, 618 millions of consumers by increasing 10 million per month steadily.
Chinese consumers now spend much longer time in online community oriented activities such as blogging, WeChat, shopping on e-commerce website, and Sina Weibo. This accounts for 91% of Chinese consumer presence on social network accounts.
There are 302 million on-line shoppers, who are expected to increase along with web users. Expecting 701 millions internet users by 2015 and 363 million Chinese will shop on-line, this accounts to 51.8% of the whole population. This accumulated to 71% increase in, Chinese e-luxury market growth.
Do luxury Italian brands “Still” have opportunities in China?
The maturity stage of the product life cycle is a difficult stage for Italian luxury goods manufacturers indicating a wide range of challenges ahead. During this stage, organization are advised to look for innovative ways to make their product more appealing to the consumers that will maintain, and perhaps even increase, their market share. For Italian luxury brands, now is the right time to reach Chinese consumers digitally. With given level of demand for Italian luxury products among Chinese consumers, sales are meant to rise.
Italian luxury brands have substantial opportunities in China, as long as they are able to understand its peculiarities and can lay hands-on e-commerce strategy elevating social media marketing.
In a report published by McKinsey research company reported that, six percent of all luxury sales now occur online, and that this should increase to 18 percent in ten years’ time.
Current status of Italian luxury brands on Chinese digital platform
Currently, there are a handful Italian brands present on Chinese digital forums. The official accounts are not active enough to keep up with tech savvy Chinese audience. Therefore, some brands are struggling to capture market digitally. However, some of well-known Italian luxury brands are incorporating digital strategies to reach the audience and increase sales of products.
Versace publishes brand stories through its Sina Weibo account catered to Chinese audience. It promotes products endorsed by international and local celebrities.
Gucci is active on Douban, a Chinese social networking site that allows registered users to record information and create content related to film, books and music. branding publishes articles and multimedia contents. In one of its Customer Engagement campaigns on social media it promoted “Cut&Craft” contest. This activity challenged its fans to exhibit creativity, and create home-made bags using Gucci’s tips and a small handbook.
Fendi is also active on Sina Weibo. It engaged its customers by involving them in online contest. It encouraged its followers to express meaning of some particular items and take theme photographs. This activity generated many responses and this way Chinese users were actively reading Fendi’s blog. However, the activity was poorly managed and users didn’t receive prompt reply to their queries.
How to engage Chinese users and drive sales?
Italian luxury brands need to communicate more often with their online customers. Offline marketing activities must integrate online marketing strategies. Brands needs to publish informative content, interactive online activities by earning rewards or point system, develop inquisitiveness and providing shop and sale options on their social media accounts.
China is a close market; hence it cannot be assumed that if a digital marketing strategy worked in some region it will work in China too. In fact, users of each city have different preferences therefore studying consumer behaviour of Chinese digital native is extremely important before rolling out campaign on social media. The brand must maintain its image and provide quality content and activities targeting its customers.
It is known that in China many luxury brands have struggled in achieving digital marketing objectives but it is not impossible.
The key is to understand the need of Chinese customers and deliver value, with customer experience that engages the audience.
Who we are ?
Gentlemen Digital Marketing Agency has vast experience of deploying marketing strategies in Chinese digital platforms and understanding of Chinese consumer behaviour. It bridges the gap between foreign brands and Chinese consumers.