Demand for luxury brands among global shoppers visiting the UK is on the rise, with tax-free spend up 22 per cent in 2013. But brands need to understand shoppers’ cultural nuances if they want to build lasting relationships.
Chinese consumers are the biggest-spending UK visitors, accounting for 22 per cent of all tax-free shopping, according to tourism company Global Blue.
With Cathay Pacific starting to fly between Hong Kong and Manchester four times a week later this year, the figure is set to rise, although the city has some way to go to rival London, which draws between 80 and 90 per cent of the tax-free spend.
China accounts for half of Manchester’s tax-free market but brands still need to up their game. Brands must also bear in mind that the behaviour of global consumers, most notably those shopping in the luxury sector, is changing.
Storytelling has always been important for luxury brands, but a new study by media agency UM suggests that brands need to provide the right narrative to enable consumers to start creating and sharing their own stories.
The study, conducted with Central St Martin’s College of Art and Design, includes data from more than 1,000 luxury consumers from the UK, China, Russia and the Middle East and reveals three types of storyteller – the ‘essayists’, the ‘autobiographers’ and the ‘freestyle poets’ (see below).
UM strategy director Mayuko Haldan-Jones says luxury brands need to understand why shoppers choose to purchase goods in the UK and what they want to get from the brand in return.
“That has direct implications on how brands should speak to them,” she says. “Brands need to be more efficient at starting journeys with consumers when they are at home so they can be continued when they are in London.”
Digital media, particularly mobile, is important for brands looking to build a ‘home and away’ strategy, finds the research, as 95 per cent of global consumers travel with a smartphone and two thirds carry a tablet.
Jennie Farmer, brand director at diamond jeweller De Beers, says the luxury industry has been slow to take up digital media but it is important for jewellery brands in particular, as it breaks down the barriers to entry.
“It’s an important part of our business because we have many clients that live in China but want to buy in Paris or London. So it’s great to be able to connect with them wherever they are and it’s important to be one coherent brand,” she says.
De Beers launched the ‘For You, Forever’ in-store app last year, which enables shoppers around the world to create their own ring designs.
“Buying a diamond ring is an emotional and financial investment and people want to feel part of it. People can feel as if they are being sold to when they walk into a luxury store but the app lets them understand what they are buying,” says Farmer.
For Chinese shoppers – the essayists – having an understanding of a brand and its heritage as well as inside knowledge of the city they are visiting is important as they want to feel like cultural insiders.
“They want to be global by being local,” says Haldan-Jones. “Luxury consumers are very aware of social cues so brands that can tap into that and make sure they know the right places to go to will help them feel like insiders.”
Retailer Start London tries to build relationships with consumers before they get to London with high-definition panoramic pictures on its website that provide a virtual tour of the store.
Digital manager Natalie Duthie believes the tool helps customers relate to the brand as “an actual boutique in Shoreditch” rather than merely a website, thereby increasing footfall.
“If someone in China can see what our store is like when they are at home, it will be on their radar next time they come to London and they will be more likely to visit us,” she claims.
Understanding the local scene
When building relationships with consumers, understanding the local market is essential, as Louis Vuitton discovered to its cost last year.
The French fashion house was forced to remove a giant Louis Vuitton suitcase, which housed an exhibition about the brand’s history, from Moscow’s Red Square in Russia after local residents accused the company of belittling its communist past in a place they consider sacred.
In contrast, Italian designer Salvatore Ferragamo launched the L’Icona campaign last year, which taps into the style of women it deems “modern trendsetters”, such as American socialite Olivia Palermo and Russian fashion writer Miroslava Duma. As part of the project, which also marks the 35th anniversary of its Vara ballet pump, consumers can create customised designs online.
Tapping into different cultures’ luxury shopping habits is essential as the number of visitors coming to the UK to shop is on the rise
“People in the autobiographers group want lush, rich, beautiful experiences. They want to show that they are bold and at the forefront of luxury and design,” says Haldan-Jones. “Brands therefore don’t need to make long online videos or talk about history and craftsmanship because it’s about what they’re doing now and what they can do for me.”
The rise of digital media has levelled the playing field for brands so that those in the luxury sector are more accessible than they used to be.
In order to promote their exclusive status, there has been a rise in what UM managing partner of client services Eve Samuel-Camps calls “iconic media” and brands using their stores and assets as “museums of luxury”.
Dior partnered with Harrods last year for a store takeover, for example, which featured exclusive exhibitions, displays and in-store activity designed to create a sharable cultural experience unavailable in tourists’ home cities.
Elsewhere, jewellery brand Bulgari created a 3D projection of the Arch of Constantine and the Colosseum embedded with jewels to mark its sponsorship of the V&A’s spring exhibition The Glamour of Italian Fashion, which was created by Drive Productions.
“Out of home is becoming a strong contender and brands can use it to start stories and speak to the storytellers when they’re in London,” says Samuel-Camps.
The use of outdoor media is important, with 68 per cent of Chinese travellers, 60 per cent of Russians and 43 per cent of Middle Eastern tourists using the London Underground.
London’s most popular shopping destination differs depending on a consumer’s outlook and behaviour, with 69 per cent of Chinese tourists shopping on King’s Road in Chelsea and 44 per cent of Russian visitors going to Westfield shopping malls.
Middle Eastern shoppers – the ‘freestyle poets’ – are seduced by the lure of established brands, which is why 53 per cent choose the West End and Knightsbridge. They are also keen to stand out, so tend to go for more quirky and unusual designs from established labels, the research finds.
Fendi has tapped into this dual desire with the launch of its Bag Bugs collection, which the brand says worked well both in the UK and abroad. Consumers can use the Bag Bugs Machine on its website to discover which character-based accessory matches their personality, and share the results via social channels.
Fendi also opened a pop-up store in Harrods, leveraging the credibility of Harrods among younger shoppers as family often accompany Middle Eastern consumers on trips, while providing an immersive and individual experience.
Shoppers from the Middle East – notably Kuwait, Saudi Arabia, United Arab Emirates and Qatar – account for 24 per cent of tax-free spend in the UK when grouped together, according to Global Blue, although as individual nations China still holds the crown with 22 per cent.
Russia is the next biggest spender with a 5 per cent share, but shoppers from Thailand and Malaysia, which both accounted for 4 per cent in 2013, should also be on brands’ radars.
Gordon Clark, UK country manager of Global Blue, says: “Thailand grew by 46 per cent last year and Malaysia by 40 per cent, making them the eighth and ninth biggest-spending nationalities in the UK. This is because companies are moving production to Thailand and Malaysia as salaries increase in China.
“That’s generating more wealth into Thailand and Malaysia and these businessmen are looking to come to Europe and spend that money on luxury goods.”
No matter which country global travellers come from, the importance of having a joined-up home and away strategy is vital and the role of digital media, in particular mobile, is only set to rise.
New global travellers and storytellers
The essayists: China
The essayists want to learn everything they can about a brand and the local nuances because it is this cultural understanding that sets them apart from the masses – they want to be an insider wherever they are.
They are interested in heritage and historical context and are engaged and creative online, which they use to research and share.
Chinese consumers are receptive to online video and other digital channels but products and experiences must be authentic.
The autobiographers: Russia
Russian consumers are driven by self-promotion and crafting a perfect image of themselves.
UM strategy director Mayuko Haldan-Jones says: “Being raised in times of austerity has had the reverse effect. Everyone feels like they need to recreate themselves and build their own luxury because it’s not inherited.”
They place modernity over heritage and use social media to craft their image.
The freestyle poets: Middle East
This group has the longest relationship with luxury. They have to conform to various rules and codes of behaviour but at the same time they are trying to break free. Half of luxury consumers in the Middle East are under 35 and they want to express themselves.
Haldan-Jones says: “Middle Eastern girls are not as conservative as Europeans think they are. One blogger said she never goes shopping for luxury brands at home because she can only get 10 per cent of the collection as people think they can’t show any skin, but they can when they are inside and with other women.”
The freestyle poets need to have a clear rationale behind their luxury purchases, so brands need to provide relevant proof points.