Though most of the work is done for individual clients, the Chinese luxury tourist study came about when different clients expressed similar concerns. When travelling to Paris and Milan to meet with retailers, SmithStreet noticed that their clients asked many China-specific questions like how to address Chinese tourists, etc. In view of these common questions, the company decided to provide their clients with one syndicated report focusing on different branches (like fashion, jewelry, etc.) rather than individual studies.
luxury travelers share their experiences
Thus, the idea for the Chinese luxury tourist study was born and soon, SmithStreet followed 120 Chinese luxury travelers by doing in-depth interviews with them before and after their trips. Asked about how the 120 participants were chosen, Mr. Button explained that one criterion was that they had to have traveled to Europe in the last six months and made luxury purchases.
Also, the company made sure to pick an equal amount of travelers with a varying exposure to luxury. Thus, about one third of the study participants were so-called aspirational buyers who just started buying luxury items. Another third consisted of experienced buyers who have been buying luxury for quite some time. They do not necessarily have to be very wealthy but have been buying brands beyond known ones such as Gucci and LVMH. Last but not least, a third group of very experienced luxury buyers consisted of wealthy travelers who spend a lot of money on luxury items in China and abroad. To guarantee a good cross-section and representative results, SmithStreet made sure to have a good 50/50 split between men and women and those residing in Chinese Tier 1 and Tier 2 cities as well.
Those having read the aforementioned summary of the study may have been as puzzled as FashionUnited to learn that Chinese luxury tourists plan about 75 percent of their overseas purchases. “So were we,” admits Button and explains: “Chinese tourists need to plan their purchases so that when in Europe, they don't spend too much time shopping but free their time for other activities like visiting cities, famous sites and going to restaurants.”
This is different from European tourists visiting Hong Kong, for example, where shopping is a big part of the trip given the city's selection and reputation as shopping mecca. Button added that Chinese customers are getting more sophisticated and doing price comparisons and thorough checks on products to take full advantages of the lower prices and better assortment of European luxury goods than in China.
The next priority would be to go a brand's Chinese language site and then to the global site. But, Button stressed, “outside the big cities or in northern China, what people are saying about a certain brand becomes more important” than one's own research. Other important factors are price, category and where in China a luxury consumer lives.
Button pointed to one challenge for all international brands, namely to know who their potential consumers are and where they are coming from. Part of SmithStreet's assessment is therefore to determine if a brand needs to provide more information or needs to get people talking about it and its products, also depending on if the brand is big or a niche player.
Asked if a brands' Chinese language site really helps, Button said: "Yes, it absolutely does. One thing we have encountered is that even outside Tier 1 cities, people have problems [with accessing international brands] and brand recognition goes down.”
The question how important Chinese-speaking staff is in stores on the European end of the business is not an easy one. “It depends on the consumer. If the age is over 40, Chinese is very important; with younger consumers, the reaction could be the opposite as they want to have an authentic experience abroad,” explains Button.
Last but not least, Button pointed to one surprise that SmithStreet discovered during the course of the study: “Even when brands come in for the first time, there are consumers who know them; that phenomenon is very common," states Button. He points to Chinese overseas travelers as well as students who constantly keep their eyes open for new and exciting brands.