Meet the Chinese Consumer of 2020

April 21, 2013

 

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country.

The preceding quote is from the latest “DFS Learning e-Blast” article, Meet the Chinese Consumer of 2020, by Yuval Atsmon and Max Magni.

In this March 2012 McKinsey Quarterly article, the authors discuss changing demographics, new spending patterns, and the implications on companies.  This is one of a series of articles we’re sharing on our growing PRC consumer.  It is important for us to understand the context of this critical consumer’s evolving needs, desires, and behaviors as we seek to effectively meet their shopping needs in the markets where we serve them.

More from the article:

Many of the changes taking place in China are common features of rapid industrialization:  rising incomes, urban living, better education, postponed life stages, and greater mobility.  Japan saw similar changes in the 1950s and 1960s, as did South Korea and Taiwan in the 1980s. 

But some unique factors are also at work, such as the government’s one-child policy and the marked economic imbalances among regions. Our analysis reveals important insights into the likely demographic and socio-demographic profiles of Chinese consumers at the end of this decade.

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments to join the discussion!

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Unleash the Power of Customer Relationships

March 24, 2013

 

Building a sustainable Customer Culture takes courage, commitment and hard work. It is solely through Customer Culture that we establish and sustain the inspirational humanistic environment that builds mutually beneficial customer relationships. The unfortunate alternative to building a rich Customer Culture is the current luxury and retail business model where nameless sales people sell luxury products and services to anonymous customers, all in the course of a one-time soulless transaction.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Unleash the Power of Customer Relationships, a white paper created by The Luxury Institute.

In this January 2012 white paper by The Luxury Institute, you will read about the seven critical steps the Luxury Institute espouses for luxury brands to build Customer Cultures that will dramatically increase customer and associate acquisition, retention and referral rates.

As all of us at DFS continue to evolve our approach to developing, delivering and measuring a true luxury customer-centric culture, this article serves as a wonderful reminder of the reason for our quest and challenges us to critically assess our strategies.

More from the article:

Do it for your brand, do it for your associates, do it for your customers, do it for society, but most of all, do it for yourself. Building a true Customer Culture in your organization will dramatically enhance your own life experience. It will transform you from being just another business executive into a happy and thriving human being who enjoys a meaningful life with a far greater purpose than the pursuit of money. Ironically, the sales and profits will follow.

 

Read the short article to learn more!

 

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments to join the discussion!

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Top 10 Consumer Trends of China’s Wealthy

February 10, 2013

With fast rising wealth and money to spend, it’s no surprise the Chinese are in a buying frenzy. China’s consumer spending is growing at an average annual rate of 18 percent compared to 2.2 percent rise for the US, according to the National Bureau of Statistics.

While some of their purchases are just plain glitzy, studies and research from organizations like the United Nations, Eurmonitor and McKinsey & Co. show that Chinese consumers are displaying great consciousness for bettering themselves and their planets.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Top 10 Consumer Trends of China’s Wealthy, by Rajeshni Naidu-Ghelani.

In this July 28 2011 article on CNBC, the author discusses where the Chinese wealthy are focusing their purchases.

As a follow up to last week’s article which covered the more detailed McKinsey 2011 Chinese Consumer Spending Survey, today’s article provides headlines of the major consumer trends.

More from the article:

Some consumer trends in China are well known, such as the increasing demand for luxury goods, but others may surprise you. CNBC.com put together a list of 10 major consumer trends, including the companies and sectors they have the potential to profit from them. The list is based on studies and reports from international organizations such as the United Nations, the U.S. Department of Agriculture, and research firms including Euromonitor International and McKinsey & Co.”

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments to join the discussion!

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Insights on Korea’s Luxury Market

October 8, 2011

DISCUSSION TOPIC

Korea’s Luxury Market – 10-04-2011

“…the performances of famous brands in Korea have been mixed. For example, LVMH and Ferragamo continued to do well, but others, like Gucci Group and Dior, saw sales drop in real terms in 2010.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Korea’s luxury market: Demanding consumers, but room to grow, by Aimee Kim and Martine Shin.

Read about the changing Korean shopping landscape in this write-up of the results from McKinsey’s 2011 Korea luxury consumer survey, available on the McKinsey & Company Web site. The authors note that McKinsey research shows that South Koreans spend a higher percentage of their household incomes on luxury goods than the Japanese do, and the South Korean market looks to sustain strong growth for several years to come. But the country’s thing for bling is evolving: buyers are beginning to think more about brand differentiation than about ostentatiously displaying famous logos.

While DFS does not currently do business directly in Korea, the insights from the McKinsey story highlight the purchasing behaviors of Koreans who continue to travel in significant numbers to many of our destinations.

More from the article:

Thus, while the headline news is that the luxury market is still growing strongly, uncertainty is also mounting. In this year’s report, McKinsey addresses these concerns, which come in the form of three key questions: Can South Korea keep it up? What’s changing? And what do these trends mean for the players in the luxury industry?”

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Aha moments – a new twist on luxury shopping

July 12, 2011

DISCUSSION TOPIC

Luxury Site Sees Opportunities in Aha Moments 07-11-2011

TOPIC SUMMARY:

Austerity, recession, belt-tightening and bargains have become watchwords for retailers and consumers over the past few years. But have they destroyed the joy of shopping? The flash sale website Ahalife.com doesn’t think so and has opened its doors to shoppers who shop for the love of it, unconcerned about bargains or price, but looking for sheer, unadulterated, luxurious pleasure.

Ahalife’s signature sales point is “curation,” recommendations from trusted advisers for wonderful products customers might otherwise struggle to find. Entrepreneur and founder, Shauna Mei, explained to New York Times reporter, Pamela Rickman, that she “offers niche products suggested by a variety of ‘trendsetters and tastemakers.'”

“Tastemakers” are said to include Diane von Furstenberg, Wendi Murdoch, Tina Brown, Tim Gunn and Lauren Bush.

Explaining why Aha differs from women’s magazines, she added, “I haven’t read print for three years and neither have my friends. … There’s a ton of content online, but it’s not curated. We can’t separate the good from the bad.” Ms. Mei’s “aha!” moment has reportedly attracted investors from banks, management consultancies and luxury retailers.

Determined to avoid targeting anyone who might resemble a “frumpy” housewife, Aha’s products are largely imported, targeting big spenders aiming to be trendsetters. Excitement and inspiration to be tempted and spend are part of the deal, along with the actual products.

Like other flash sale sites, Aha features one offer a day from categories such as fashion, food, beauty, accessories, home décor, tech and travel. Aha’s business model is based on consignment buys rather than stockholding, with potential profits coming from a traditional wholesale/retail relationship.

Discussion questions:  Is the joy of shopping enough incentive for a luxury website without any discounts or special offers? Does the value of ‘curated’ selections work as well online as in high-end retail?

My post:

One more interesting paragraph from the nextweb article:

Mei believes AHAlife has the potential to be ‘the future trusted media company with a buy button.’

“If you think about the various publications and magazines out there, most of them have not really explored e-commerce,” she says. “We believe in content + commerce + curation and I think this trend will continue to last in the next five years. I see AHAlife as the go-to destination for brands to launch the coolest lifestyle products from around the world and where the most discerning consumers go to discover the best the world has to offer.”

I think Ms. Mei has truly hit on something special – combining the joy of the hunt, ‘belonging’ to the cool crowd, and desire to be noticed into one very hot shopping social site.  I do think the way she is handling curated selections is unique and exciting and will allow the site to be a key product launch platform and a place “to see and be seen.”  Kudos to Ms. Mei for coming up with something new to excite fashionistas and retailers to expand the boundaries of shopping.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full article at Retailwire.com:  Opportunities in Aha Moments

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Lower prices at Neiman’s?

June 28, 2009

DISCUSSION TOPIC

Neiman Marcus Capitulates on Price 6/15/09

TOPIC SUMMARY:

After reporting a 24 percent decline in third quarter sales, Neiman Marcus Group disclosed plans to offer more lower-priced goods and promotional marketing events. On a conference call last week, Burt Tansky, Neiman’s CEO, said that while customers hadn’t questioned the chain’s prices in the past, “we are sensing a shift in our customer’s mind-set.”

The new merchandising strategy, according to The Wall Street Journal, “will strengthen our position in mid-price” goods, the company said, and equates to a “rebalancing” of its mix to include some lower-priced goods among its designer collections.

However, Mr. Tansksy cautioned, “This is not something that will occur overnight,” and the larger impact won’t happen until Spring 2010. In the meantime, more promotional and other events are being planned to boost sales.

Mr. Tansksy also said he doesn’t see a turnaround occurring soon. “We believe that the recovery is tentative and any improvement will be gradual,” he said. As a result, it is pursuing a “conservative” merchandise-buying plan for the fall and will curtail capital spending by 25 percent in its next fiscal.

Neiman’s move follows several similar ones by other luxury purveyors to lower prices:

  • Barneys has been opening more of its “Co-op” discount stores while closing some of its regular boutiques;
  • Saks announced plans to open several of its “Off 5th” outlet stores while skewing pricing at its full-price stores more toward affordable merchandise;
  • Pottery Barn Kids, following in the footsteps of its parent Pottery Barn, will substantially increase the number of lower-priced products it offers starting this fall;
  • Longtime fashion designer Max Azria in early June reached an agreement to develop a Miley Cyrus/Max Azria collection for Wal-Mart Stores. Prices top out at $20 per item.

Tiffany is among the fewer and fewer high-end stores stating that it would not cut prices.  But the luxury jeweler is finding its customer looking for bargains as well, even to the point of haggling at counters.

“Everyone feels compelled to ask the question for fear of feeling foolish after the fact,” Tiffany chief executive Michael Kowalski said at the Reuters Global Luxury Summit in New York. “And yes, the questions are being asked more often and the answer is the same — the price is the price is the price.”

Discussion questions:  What’s the best strategy for Neiman to offer more value in their offerings without impairing its upscale positioning?

My post: 

I find this development disheartening.  I have always admired Tansky’s firm resolve to remain a true luxury retailer and never succumbing to the lure of lowering their standards due to short term economic difficulties – no matter how severe.  In fact it was Tansky who belittled former CEO Terry Lundgren’s “much better” strategy in the early 90’s when he tried to add moderately priced product, with disastrous results.  The customer for this product can find it in any other department or specialty store, and in Tansky’s words, the true Neiman Marcus customer is not interested in buying lower-priced merchandise.  Within each luxury brand’s assortment, there is the opportunity to lower the average price points through careful product selection and increasing the mix of accessories, etc.  It is a monumental mistake to risk the brand of Neiman Marcus by adding moderate product.  I fear the real reason for this isn’t Tansky changing his tune – but rather the private equity owners forcing his hand in order to deliver short tem results.  Private equity buyers seldom hold onto their purchases for more than 3-5 years.  Could a sale of NM be in the cards in the next 24 months? 

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13804

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From Snooty to Friendly Luxury Service

February 27, 2009

DISCUSSION TOPIC

Snooty Attitude Tones Down at Luxe Boutiques 2/27/09

TOPIC SUMMARY:

According to The New York Times, a quick glance at a man’s watch and shoes has been a common and effective tool for sizing up potential customers at designer boutiques. Working heavily on commission, a sales clerk gains invaluable insight into which shoppers to chase and which to ignore.

Such practices have also tagged clerks at high-end stores with a reputation for snootiness and all-out rudeness. But the Times notes that virtually overnight, the brutal recession has changed those attitudes to a “level of customer service rivaling that of Disney.”

MaxMara recently held employee seminars on enhancing the shopping experience “of anyone who walks through the front door,” and the article claims other stores “are making more effort to greet and engage.”

Putting the findings to a test, the Times reporter, Eric Wilson, went undercover. Donning an outfit described “if not poorly, then as plainly as possible in a sweatshirt, jeans and dog-walking shoes,” Mr. Wilson visited a string of boutiques along Madison Ave. in New York City.

For the most part, luxury boutiques passed the test with flying colors.

Discussion questions:  Do you think the snooty reputation at high-end stores has toned down given the recession or has it always been widely overblown? If there is a longstanding snooty attitude in high-end selling, is it in any way justified?

My post: 

Certainly many boutiques provide lousy service.  In the case of high-end stores, this is typically described as snooty and rude.  In lower-end stores it might be described as uncaring or non-existent.  Service in the past and present has more to do with the vision of the retailer and the people they hire to manager their stores and service their customers, than the current economics.

In today’s environment, retailers of all kinds are pushing like never before to go out of their way to be helpful, courteous, and welcoming.  This is particularly true in stores where the brand mission is service oriented to start with.   It is likely to be found where the brand typically stands for service and quality – a fairly common aspect of luxury brands.  The reporter’s example of lousy service in Gucci, however, proves that the people you hire to manage & staff your stores determine the service that will be offered.

Mike Osorio, your Dare to be Contagious! TM strategist

www.OsorioGroup.com

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13581

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