Luxury brands turn their gaze to increasingly picky millennial buyers

September 28, 2018 | 05:20 pm GMT+7
Multimillion-dollar fashion brands in Hong Kong are transforming themselves to appeal to rich young customers.

Christine Chen, 27, was looking for a special wedding gift for her best friend. Loaded with cash, she went into one luxury store after another at a mall. Doors were opened obsequiously and staff in tuxedos fawned over her.

But soon her interest in luxury fashion dissipated, at least temporarily, because of the overwhelming attention she received.

Fifteen minutes later she was out of the door without completing her shopping.

Christine’s story epitomes the experience of many young Hong Kong shoppers: They have no problems buying item after item online but quickly lose interest when the very same items are physically displayed in front of them along with an army of sales staff.

High prices are not a problem, according to Christine, but the shopping experience at luxury stores often makes her and her friends reluctant to buy.

Hong Kong has seen many changes in buying behavior in recent years. Some have not been kind to sellers as the closure of many Burberry, Coach and Louis Vuiton stores due to lack of patrons testifies.

Bloomberg presumed that wealthy Chinese, who account for much of the luxury items purchased, are no longer willing to wait in queues for the latest watch or handbag.

On the other hand, the surge of millennial buyers in the ages of 20-34 is transforming the traditional demographic at shopping malls. Their increasing incomes and family financial support allow the young to shift from fast fashion to posh clothing and accessories.

Bain & Co has predicted that by 2025 millennials and the Generation Z (people born after 1996) will be the consumers of 45 percent of luxury fashion sold on the planet.

Then again, it is not easy to make them buy. After being accustomed to middle-aged buyers for long, sellers of luxury goods now have to turn their gigantic marketing machinery toward increasingly younger buyers.

Chow Tai Fook is one of the top 10 luxury fashion brands and has colossal revenues. It is larger than brands like Hermès, Rolex, and Prada, according to Deloitte.

Since 2016 Chow Tai Fook has been making over its traditional outlets to make them millennial-friendly. It also has online shopping portal ctfeShop.

One of Chow Tai Fook Experience store.

One of Chow Tai Fook Experience shop in Hong Kong. Image: Chow Tai Fook.

Standing out is its branch in Kwai Fong, one of the island’s nightlife hotspots. Guests encounter a pink-themed café inside the store that ensures no one leaves thirsty. The selfie generation also loves the Kwai Fong branch for its check-in area specifically meant for taking photos.

At another of its outlets in Hong Kong, Chow Tai Fook even offers customers the experience of personally wrapping a jewelry gift box with items bought on the spot.

In each area, stores have their own signature color, with red being a symbol of fortune and light blue and pastel pink representing youth.

The company came up with the idea of jewelry vending machines in Shanghai inspired by traditional vending machines.

It also bought copyrights from Disney and rolled out jewelry lines inspired by the latter’s cartoon characters.

All these are meant to help young buyers feel more comfortable at Chow Tai Fook, Po Liu, its international business director, explained.

Chow Tai Fook’s range of campaigns for the brands under its umbrella works toward the same goal.

T MARK is a diamond brand that focuses on the diamond traceabilityand authenticity. diamond is inscribed with a mark that carries a set of unique serial numbers, enabling customers to trace the life journey of a diamond from sourcing to production.

SoInLove is a jewelry gifting brand with affordable price, young style. Monolgues is an on-trend jewelry brand for trendsetting millennials .

French luxury brand Guy Laroche recently launched a series of art watches in Hong Kong and China.

Instead of thin leather straps in classic yellow and brown tones, they come with pastel straps and large faces with imprints of French paintings.

This personalization was in response to millennials’ need to express themselves, and the watches are a favorite item, especially for online shoppers.

Guy Laroches watch with French painting.

Guy Laroche's watch face with imprints of French painting. Image: Tuan Nhu.

Elise S.M. Tsui, a distributor of Guy Laroche watches in Hong Kong, said young people were becoming her main customers. So her company also employs young people in managerial positions.

"Young people have innovative views that help us reach our target audience quickly, while the experience of older executives reduces potential risks."

Vietnam too

This shift in demographics is also happening in Vietnam.

Since the beginning of last year Lacoste Vietnam has seen VIP customers aged 24 - 35 years increase by 315 percent. A VIP customer is one who makes a one-time purchase of at least VND27 million ($1,155).

Bui Thu Phuong, marketing director of Lacoste Vietnam, said in the last two years, amid fierce competition from international and domestic fashion brands and the entry of many global names, Lacoste set out to build strategies to attract millennials and the Generation Z in addition to the middle-aged segment.

"This is a very promising customer group that many brands are interested in. They were and have been key players in the global workforce. This young group always wants its needs gratified immediately."

Concurring with Phuong, Nguyen Thi Minh Thu, marketing director of Precita jewelry, said millennials as a customer group account for a big proportion of purchases of high-end brands.

They were born in the digital age and live with the digital world for more than 24 hours a week. Health and beauty are their major interests, but they are also very particular about the quality of the products they buy and how practical their spending is.

Designer Do Long has been in the fashion industry for eight years and runs a design shop. A few years ago his clients started to see younger buyers, aged 25-35, flood in, but now many 18-20-year-olds can afford customized, expensive attires, he said.

To gain market share, designers and luxury fashion businesses are forced to innovate strategies and technologies to produce esthetic, trendy, cost-effective, and versatile lines while simultaneously their clients offering new experiences.

For instance, someone who has four Precita earrings can wear them in 20 different ways. The brand personalizes wedding rings by engraving hearts on their inside.

Earlier this year Precita tweaked its website to enable customers to research products and buy with a few clicks.

In 2017 and 2018 Lacoste spent its entire marketing budget on digital media like online newspapers and magazines, social networks and outdoor displays in malls and other venues frequented by young people.

The brand also employs young influencers to promote its items, including models Quang Dai and Helly Song, Miss Vietnam H'Hen Nie and singers Noo Phuoc Thinh and Isaac.

This marketing ploy has been adopted by many businesses to connect with the millennial customer.

As for Christine Chen, not only did find jewelry for her friend, but also got to personally enclose it for her in a small, pretty chest.

"This shop is decorated like a treasure chest and each chest has its own code. All I have to do is pass the code to my friend and she will have a pleasant gift experience."

Tuan Nhu

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