China accounts for more than a third of luxury spending and big brands are doing their utmost to lure its travellers. But as the Chinese consumer profile shifts to a younger, savvier, more fashion-conscious one, shops are having to work harder to open their wallets.
Under dozens of red paper lanterns, a tour group from Beijing gathers at 21 Boulevard Haussmann in Paris’s 9th arrondissement and waits for the guide to wave them into the shopping space. They disperse among the leather goods, pens and sunglasses and follow Mandarin signs into a food and cosmetics hall. Here, staff greet them with “huanying” (“welcome”) before the shoppers stock up on Frédéric Malle perfumes and tins of Parisian Petrossian caviar. “It is convenient here,” says Li Jun, a biochemist from Changchun, who has a basket loaded with Valrhona chocolates. “There’s everything we need.”
This is Galeries Lafayette’s latest retail venture, a Shopping & Welcome Centre, which opened last March just a few hundred metres from its famous department store. Created by French designer Ora-ïto, it has large windowless waiting areas to accommodate groups. When monocle visits, products are festooned with dog-shaped tickets announcing (in English) “Happy Spring Festival”. In the window, a sculpture of the Eiffel Tower sits next to a red box of chocolates bearing the label: “Happy Chinese New Year. The Year of the Dog”.
It’s no surprise that France’s luxury giants are targeting Chinese customers. What’s less clear is whether playing to familiar territory (Mandarin signs, paper lanterns) is the best way to woo them. China accounts for 32 per cent of the world’s luxury spend and, earlier this year, conglomerates lvmh (owner of Louis Vuitton and Dior) and Kering (owner of Gucci and Saint Laurent) attributed much of their record-breaking 2017 profits to Chinese clients.
“China has huge potential,” says Fflur Roberts, head of global luxury goods at Euromonitor International. “Given its size and expanding middle class this is only the beginning. In the coming years I wouldn’t be surprised if that figure reaches 40 per cent or even half of the market.”
With an acute sense of yangqi (foreign quality), Chinese tourists are often in pursuit of an object with bona fide provenance and a story to tell. They spent €214bn on foreign travel in 2016 – a figure which rose 12 per cent in the last year alone. (Only 4 per cent of the Chinese population has a passport.) In Paris, it is often the Chinese who form queues outside the Hermès flagship on Faubourg Saint-Honoré or Louis Vuitton’s emporium on the Champs-Élysées.
Yet the idea of a brand-hungry Chinese tourist, content to move en masse on a bus, is swiftly changing. China has a 385 million-strong generation born in the 1980s and 1990s and increasingly it’s these “young luxers” who are shopping at home and abroad. A report by Paris-based tourist group Alliance 46.2 showed that 82 per cent of Chinese visitors to France are 26 to 45 years old. “Years ago the key players in the industry were saying the Chinese were just interested in the brand. That’s no longer true,” says Roberts. “Their knowledge is tenfold what it used to be. They are leaders of the pack somewhat.”
Influenced by guidebooks such as XiaoHongShu (Little Red Book) and fashion writers including Gogoboi Ye Si and Wenjun Lau, younger Chinese travellers are looking for experiential shops. “This generation is less fixated with big brands,” says Peter Xu, a Chinese stylist, broadcaster, rapper and blogger with 1.3 million Weibo fans. “I think [travellers] used to love the lower prices and wider range of product offers [but now] experience is very important and that’s why stores like Merci are popular among certain groups. Luxury brands and street brands both command respect.”
“The profile of [our Chinese] clientele has evolved in the past five to seven years,” adds Olivier Di Maggio, client relations and services director at Le Bon Marché department store. “They are international, they are younger, they speak English. They are fashion conscious, cosmopolitan. They want to have the feeling of being in a Parisian department store, the feeling of being like a French client.”
While Di Maggio was careful not to disparage his Right Bank competitors who cater for groups, this quintessentially Parisian experience is what Chinese consumers will covet. There’s a good chance that the travellers of tomorrow will reject the tenets of Galeries Lafayette’s latest venture, which shields Asian clients from an authentic French shopping experience.
“Chinese millennials are informed,” says Sophia Dumenil, who runs Paris consultancy The Chinese Pulse, and explains that this demographic is no longer hankering after the marquee labels but is instead interested in independent brands such as Vetements, Jacquemus and Maison Kitsuné. “When they travel they want to experience something with soul, something with a story they can tell on social media. They want to shop but they also want to have an experience.” Not all the sales spikes are the result of Chinese customers shopping abroad. The Chinese government has attempted to “reshore” luxury spending, cutting some duties on official imports and cracking down on grey market daigou agents (personal shoppers who ferry luxury goods from abroad for resale in China). Luxury houses such as Chanel and Cartier set about “normalising” (equalising) prices between Europe and Asia. The result has been a luxury boom on the mainland. A report by Bain & Company shows that the Chinese domestic luxury fashion market boomed 20 per cent in 2017, playing a key factor in the record-breaking profits of lvmh and Kering brands.
Urbane Chinese consumers are still travelling, yet data shows they are less inclined to stuff suitcases full of goods and more keen to spend money on food and entertainment. Now that European cities are recovering from the slump in visitor numbers that followed 2015’s terrorist incidents, brands are re-evaluating how to entice them. Bain’s report showed that all of the top 40 luxury brands now have a WeChat account (the Chinese social media app) and spend 30 to 60 per cent of their digital marketing on this channel. Additionally, 2018 is the official EU-China Tourism Year – a diplomatic and business venture that seeks to increase the flow of tourists. A launch event at Doge’s Palace in Venice saw tourism insiders share tips on welcoming Chinese visitors. For instance, serve glasses of hot water and make sure Chinese customers can access UnionPay, WeChat Pay and Alipay.
As China’s next generation ventures abroad, brands should realise that it is history and authentic retail experience that will have currency for tomorrow’s shoppers. Retailers must remember that they need to offer cultural contact invested with emotion, not just facile commercial transactions.
It’s telling that Louis Vuitton redesigned its Saint-Germain-des-Prés store with a brooding work by Bernard Buffet in the lobby and that across the street Sonia Rykiel’s store looks like a bookshop lined with French classics. Most recently, Paris boutique Nous (opened by former Colette staffers) said it aims to be at the “crossroads of street culture, art, design, fashion, luxury and creativity”; each month its windows will be appropriated by a different artist. Here’s betting that a large chunk of their customers will be the tech-savvy Chinese travellers of tomorrow.
The number of Chinese passport holders is forecast to swell by 100 million over the next decade.
Shoppers from the three major coastal regions of Huadong, Huabei and Huanan account for 76 per cent of the Chinese market in France.
Tourism expenditure from China went from €19.2bn in 2006 (3 per cent of the world’s total) to €214bn in 2016 (21 per cent of the world’s international tourism spending).