This view comes as Xu and his fellow Generation Z (those born between 1997 and 2012, according to the think tank Pew Research Center) will soon become a major force in driving the world's second-largest consumer spending in China. reflects the expected impact on how products are sold in the United States. -The largest economy.
Generation Z is already the fastest growing population group in the Asia-Pacific region, and is projected to account for 21 percent of the mainland's total population by 2025, according to a KPMG China report.
But while their influence and spending potential makes Gen Z a key target group for many brands, they're also a difficult market to capture.
“Gen Z is different,” says Sophie Coulon, co-founder of Shanghai-based digital agency VO2 Asia Pacific. The company's customers include several major international brands.
“Because they grew up in a different environment, they haven't experienced all the struggles of their parents and grandparents. They're digital natives, so they expect things. [to be done] It’s very fast,” Coulon said. “But at the same time, they also face pressure from society. They want to express themselves, and buying clothes is a way to express themselves. [their] Identity. It's not just, “You're somebody because you have a bag.'' ”
02:09
Young Chinese people abandon consumerism in favor of enriching experiences
Young Chinese people abandon consumerism in favor of enriching experiences
Still, Gen Z's purchasing power makes them attractive to many brands. According to data compiled by consumer research firm Kantar Worldpanel, consumers aged 15 to 24 will account for 93 billion yuan (US$12.9 billion), or 22.1% of China's 424 billion yuan beauty market, by 2023. Ta.
The company found that people in this group spend 44% more on beauty products than people up to age 64.
According to a recent report from PwC, among China's wealthy population, Generation Z will be the beneficiary of a massive intergenerational wealth transfer of $3 trillion over the next decade, making them an important group for luxury brands to focus on. . .
01:53
Inside China's demographic revolution
Inside China's demographic revolution
International brands are also taking notice and stepping up strategies to capture the hearts and minds of these young Chinese consumers.
China accounts for about 15% of the Austrian crystal maker's business, which contributed to the company's global retail sales of 1.8 billion euros ($1.9 billion) last year. Swarovski said in a statement that the growth rate was 4% year-on-year and “significantly outpaced overall growth” in a difficult and volatile market.
But the problem for brands is that Gen Z's tastes can be fickle and difficult to pin down.
Nicole Xu, a Shanghai-based marketing expert (no relation to fellow city native Judy Xu), has a personal connection to the “quiet luxury” trend currently all the rage on social media. “I think it's boring to look at,'' he said.
Although this demographic group tends to be less status-conscious and more pragmatic than older consumers, “Gen Z is more likely to embrace lifestyle traditions that provide emotional value, design, and product experiences.” “Brands must have their own irreplaceable difference,” said Jason Yu, Kantar's Greater China Managing Director. added that consumers tend to be less status-conscious and more realistic than older consumers.
“Foreign brands are facing increasing pressure to be displaced by the rise of high-quality, high-priced domestic brands in China,” Yu said. Therefore, a brand like Swarovski, which has no direct competitors offering comparable products in the country, can maintain a certain dividend in the market, he added.
Swarovski CEO Nagard said he felt Gen Z's tastes were more nuanced. “Western luxury brands have an interesting and unique cache, but they are increasingly open to local alternatives if they can deliver the value they expect from the brand or product. '' he said.
Based on the company's observations, Gen Z consumers tend to be more willing to try bold items than older Millennial consumers, he added.
China now accounts for 7% of Ralph Lauren's global business, according to a Reuters report. Ralph Lauren's overall revenue in Asia increased 16% from the second quarter to the third quarter of the current fiscal year, according to the company's February earnings release.
However, Zheng cautioned luxury brands from focusing primarily on young mainland consumers. “They are more vulnerable to economic fluctuations,” she says. “When the economy is not doing well, spending power goes down, so luxury brands should focus on the ultra-high net worth as their core customer group,” she added.
