Chasing the high-end Chinese shopper, American style

Updated: 2014-01-27 11:20

By Zhang Yuwei(China Daily USA)

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When Molly Sun, a PhD student at Columbia University in New York, talks about her job as a "cultural ambassador" at luxury-goods department store Bergdorf Goodman, she describes it as an "amazing experience".

Sun is one of eight Mandarin-speaking assistants on the shopping floor at Fifth Avenue's Bergdorf Goodman who help Chinese tourist-shoppers - in particular those who don't speak English - have an easier and smoother shopping experience.

"Here at Bergdorf, they like to buy things they can't find in China, such as limited editions," Sun said, adding that luxury handbags and shoes are their favorites. "Not so much clothing, though."

The store started accepting China UnionPay's debit and credit cards last January in a further expression of its commitment to Chinese customers. Bergdorf Goodman's $300-$500 gift card to UnionPay cardholders with any purchase between $3,000 and $10,000 is a big attraction for Chinese tourist-shoppers, Sun said.

The New York store is one of a number of luxury goods stores that have stepped up efforts to attract Chinese shoppers - many of whom are tourists - with strategies such as a Chinese New Year window display, hiring Mandarin-speaking assistants and getting on Chinese social media platforms such as Weibo (China's Twitter-like micro blog) and Wechat (a smartphone messenger app).

"Every year we'd do something different," said David Hoey, senior director of visual presentation at Bergdorf Goodman. "Red and red" is always a good idea, he said, referring to a store color scheme for the Chinese New Year selling season.

Chasing the high-end Chinese shopper, American style

Avery Booker, partner at China Luxury Advisors, a consultancy that helps brands in the US and Europe attract Chinese shoppers, said Bergdorf's is "an excellent example of a retailer that sees the Chinese shopper not as a walking wallet, but as a long-term client they hope to serve for years to come".

It's important to "look at the opportunity provided by this demographic in a holistic way - the window displays entice them from the street, then they're greeted and served in Mandarin and can pay with China UnionPay," Booker said.

Bergdorf's strategy to tailor its services to high-end Chinese customers reflects how much international brands value the group. Similar to Bergdorf, many foreign retailers and international brands are forming different strategies to attract members of the growing middle class and wealthy individuals in the Chinese market.

Although China's young wealthy and ultra-rich present tremendous opportunities for retailers of foreign luxury brands, they are getting more and more sophisticated.

Bergdorf's Sun said despite Chinese being mostly "big spenders", they are also very price-conscious. "Most of them do currency conversions before buying," she said.

In a recent study, consulting firm Bain & Co found that Chinese shoppers do two-thirds of their luxury shopping abroad, triggering slowdowns in domestic store traffic and openings.

Chinese remained the largest nationality of luxury buyers worldwide last year, representing 29 percent of the global market, up four percentage points from 2012, according to the study.

Michele Sofisti, CEO of high-end Swiss watch brand Girard-Perregaux, said China will be the company's key market in the next five years. He said the company needs to present "authenticity" to attract more Chinese consumers.

"The Chinese consumers need authenticity, they need quality and the real value every single brand can bring there," Sofisti said.

Booker said foreign businesses also need to consider "cultural particularities", which include tailoring campaigns around national holidays, being conscious of color schemes and styles of promotional campaigns, working with the right local brand ambassadors, and considering electronic commerce.

"Simply opening stores and waiting for the consumers to walk in won't work now," Booker said.

Despite the potential of high-end visitors from China, the country's projected slower GDP growth is expected to affect the luxury goods market, according to analysts.

"Overall, slower GDP growth won't necessarily mean people will stop buying luxury goods completely," Booker noted. "They'll just change their behavior, either purchasing fewer items or more accessible luxury brands."

Sofisti said that compared to Europe, where he is based, China is "still a growing economy". The young generation in China shows "a lot of energy and passions" and that's a good sign for the economy, Sofisti said.

Booker said the demand for luxury goods in China will rise this year.

"There is still quite a lot of untapped potential in the market, because demand continues to grow in inland cities, where wealth is still being created and new luxury consumers are entering the market," he said.

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(China Daily USA 01/27/2014 page2)