Who Are The Luxury Buyers In Southeast Asia?
More luxury brands have been making an extra effort to attract affluent consumers from emerging markets which play a crucial role in the growth of the luxury industry. The incomes of these consumers are facing a steady growth in many markets across Southeast Asia (SEA) which shifts the focus of many luxury brands towards them as they notice a growth struggle in developed markets such as Hong Kong and China.
Countries such as India have been identified as being a key player in the future spends for the luxury retail sector having a steady economic growth that surpasses that of China. Further driving this is the increasing pool of consumers with higher demands for luxury products in India.
Despite China remaining as the largest market for luxury retail, there are many other emerging markets in SEA such as Vietnam and Thailand have displayed an upbeat for potential luxury expenditure in the future.
“More and more domestic people in Southeast Asia are becoming capable of entering the luxury market,” said Jean-Christophe Babin, Chief Executive Officer (CEO) of Bulgari.
An influx of Chinese tourists would be another key driving factor contributing to a higher demand for luxury goods in the SEA region. Due to the inflation of prices at the native homes, the Chinese consumers have been recorded for doing more of their shopping outside of their country. The massive numbers of incoming Chinese tourists on holiday has greatly boosted the luxury market.
SEA’s growing middle class has also been experiencing a stable income growth as their economies are constantly going through development as emerging urban hubs. This opens the doors to more job opportunities for the general population which directly impacts the sales of the luxury industry when more consumers go through a shift in their spending priorities.
Chris Neff, Asia Managing Director of Swiss luxury watchmaker Chopard, mentioned the two types of luxury customers commonly found in SEA. One being the sophisticated luxury customers and the other being those who are in the early stage of exploring luxury products. He further discussed both types of luxury customers, differentiating the two; as the established luxury customer already possesses a knowledgeable understanding of the quality of luxury products, meaning a different strategy will be required to further engage this group of luxury consumers. Next, the budding group of luxury customers who are the growing middle class which have gained a decent income level, giving them the ability to purchase quality and branded products. He emphasized on the need to devote considerable amounts of time to educate the emerging group of luxury consumers on what luxury is all about and said that this was crucial in most SEA markets.
A survey conducted to measure the overall sentiment of affluent Singaporeans revealed that the younger demographic of luxury consumers placed immediate gratification over long-term wealth accumulation when making their decision on buying a luxury product. Amrita Banta, managing director of Agility Research and Strategy added that there has been a general shift in luxury customers across the Asia Pacific where they are beginning to show more interest in experiences, rather than simply purchasing luxury goods. In the digital age, the growing luxury consumers are more accustomed to digital tools having grown up alongside new and innovative technology. This allows luxury brands to establish stronger connections and engagement with them digitally with a heightened customer experience.
It is clear that the future of luxury retail will rely heavily on the millennial luxury shopper with predictions that they will have the highest spending power in the years to come. This has made it crucial for luxury brands to improve existing marketing strategies and diversify the way they engage luxury consumers. While new technologies are constantly emerging with a wide array of benefits, the challenge still remains for luxury brands to maintain or attract luxury customer’s interests.