The global luxury market has contracted by up to 22% during the pandemic but the wealthy Asian market saw a much smaller reduction of around 7%.
Overall, the region’s share of the global personal luxury goods market increased from 32% in 2019 to 37% in 2020.
There is undoubtedly demand for a wide range of premium products across this large and diverse region.
Personal luxury in Asia
Despite the pandemic, the outlook in the region is positive and it is predicted to account for 40% of the global personal luxury market by 2025.
China has now outstripped Japan as the leading market for premium products in Asia Pacific, and Taiwan has overtaken Hong Kong for the first time. The sector was affected by the decline in tourism and reduced demand from local consumers in 2020, especially in Japan, Hong Kong, and Singapore.
China’s overall share of the global luxury market will be increasingly significant, and it is predicted that it will represent 41% of all sales in the region by 2025, up from 36% in 2020. However, behind this trend, there are some important factors, including:
- varying growth in sales ranging from 10% to more than 70%, depending on the brand
- significant differences in regional performance with the north and northeast regions underperforming compared to the south, east and southwest regions
- differing growth rates in product categories, with leather goods and jewelry leading, followed by ready-to-wear clothing and shoes, beauty, and watches.
Key strategies for premium product sales in Asia
Cultural crossover – a notable feature of the region is the number of young, affluent consumers. There’s also a crossover between luxury brands and popular characters from pop art to Japanese manga.
Tapping in to regional cultural trends is an effective way to engage with the younger generation of luxury customers who are becoming more discerning in their consumer choices.
Almost two thirds of millennial and Gen Z consumers like to try new products and four out of 10 want to engage with innovative brands. Imaginative and unique collaborations will be important to engage with this key age group and to remain relevant.
For example, both Loewe and Gucci launched cross-over editions of Japanese manga characters in 2020 responding to their growing popularity with young consumers in the region.
Localization – creating stronger connections with luxury consumers will strengthen brand desirability, so understanding and connecting with your local market will be important. For international brands this must demonstrate a clear understanding of local culture rather than simply adding an Asian face to your storefront or advertising.
More than 40% of the young, wealthy audience say they prefer buying from brands that are aligned with their own values.
Circular retail – sustainability, affordability, and collectability are keywords for the Asian luxury market. The popularity of pre-owned luxury goods has accelerated during the pandemic.
Consumers in Asia are showing greater interest in sustainability and are considering the wider impact of their purchases. Vintage stores are becoming favorite destinations for opinion leaders, increasing the fashion value of vintage luxury goods.
Verstaire Collective, the online vintage luxury site is growing rapidly in Asia and has extended its collaboration with luxury groups since 2020. In March 2021, the French fashion group, Kering, acquired a 5% stake in the company, highlighting the potential of the circular luxury business model.
Exclusivity – before the pandemic luxury goods businesses might have felt that ecommerce could detract from their exclusive branding. Now they have been forced to reconsider. Dozens of luxury brands including Gucci, Cartier, Montblanc, and Prada set up online shops in China last year to boost sales.
China’s most widely used social media platform, WeChat, also contributed to the digital growth of luxury brands in China. The gross merchandise value of sales had already reached 800 billion yuan in 2019 but saw a surge of 115% between January and August 2020.
An omnichannel strategy is now a requirement. While premium product brands still need to refine their digital channel strategies, they will be essential to increase accessibility and promote exclusivity in new markets.
A sophisticated approach will be needed to create customer journeys that can seamlessly move between online and offline experiences. A high level of integration will be the key that allows customers to be the focus across all touchpoints.
Customers will expect the highest levels of personalization to deliver valuable, exclusive experiences that will be engaging and build brand loyalty.
Your business growth partners
At Williams Commerce we help our customers to make the most of their ecommerce investment. With our experience around the world, we can develop strategies for growth, enhance existing ecommerce sites, and optimize business results.
Please get in touch to discuss your plans to promote premium products in the Asian market.
