Accessible luxury (also called ‘affordable luxury’) refers to goods priced between mass fashion and ready-to-wear. Think Michael Kors, Kate Spade and Coach – brands that combine original design, excellent quality and distinct angles on heritage, with a price tag that allows the item to be a wardrobe addition every season.
There’s no question these the Accessible luxury market in China has proven a hit with Chinese consumers. Tapestry, the holding company of Kate Spade and Coach, has said China is the company’s number one priority. If you’re playing in this space, with fashion or jewellery items that sit between RMB 1000 and 5000, you’d be wise to pay attention to these trends.
We’ve previously emphasized live streaming’s boom. Last year, Alibaba’s Taobao Marketplace generated more than RMB 100 billion (USD$15.1 billion) in gross merchandise volume (GMV) through livestreaming sessions, an increase of almost 400% year-on-year. Now, livestream accounts for 9% of e-commerce sales.
Brands are paying attention to this channel shift. Relevantly for accessible luxury, livestream is getting more upmarket. Clothes and cosmetics with higher price points are making their way onto livestream, with higher conversion rates than traditional e-commerce (see figure below).
For accessible luxury brands, getting proficient at three livestream formats is important: ‘See Now Buy Now’ (fashion shows with e-commerce integration), launching products via exclusive livestreams, and 1:1 video concierge with knowledgeable product assistants.
Across the hard luxury and accessible luxury market in China, there’s more impulse purchases (see Figure below). Our own studies, as well as data from Bain & Company, suggest that the percentage of consumers who make luxury purchases inside 24 hours has doubled.
There are a few key implications from this trend.
First, store managers need more merchandising assets and authority to change up in-store merchandising on a regular basis. This makes physical stores feel fresh, drawing in brand loyalists, curious luxury aficionados and window-shoppers alike.
Second, digital brand assets and presentation need to be re-examined. Over time, brands visual appearance on WeChat and Weibo trends toward a “templated” look and feel. Ask AgencyChina for a review of your social presence in China to make the first step towards freshening things up.
Pop-up retail is hardly new, but last year saw a broader range of brand expressions – from cafes, to retro gaming centers, all the way to parties on luxurious boats (see figure below). All of these are ways to try and create and reinforce associations between the brand and its products.
Beyond the headlines and Instagrammable event photos, pop-ups also drive business outcomes. This is particularly the case in cities and geographies which are underserviced by brand stores. For instance, pop-up retail formats are where 15% of Tier 2 consumers made their last luxury purchase offline (see Figure below).
In summation, there’s a strong business incentive to keep affordable luxury as fresh and novel as possible. Clever deployments of livestreaming, upgrading digital marketing assets and sharpening pop-up retail strategies should all be part of this when operating in the accessible luxury market in China.