The Chinese luxury market and digitalization: possible strategies for Western brands and Louis Vuitton as a case study

Abstract

The Chinese luxury market is an impressively dynamic one, and Chinese luxury consumers are among the most demanding and diversified in the world. In the last decade, due to rapid economic growth, increasing digitalization and large-scale events such as the COVID-19 pandemic, Chinese consumer behaviour has undergone some changes and Western luxury brands need to adjust their strategies accordingly if they want to maintain their presence and their competitiveness in the Chinese market. The purpose of this study is to analyse the causes and trends that have led the Chinese luxury market to an increasingly higher level of digitalization. The focus is going to be on the so-called “New Retail” and the strategies Western brands are adopting to keep pace with this tendency. In the first chapter, the study focuses on how Chinese consumer behaviour has changed within the years and how it differs among different groups of Chinese consumers, focusing on Millennials and Gen-Z. This first part highlights how big and diversified Chinese luxury market is and the main challenges foreign luxury brands face when they operate in it. In the second chapter, the concept of New Retail is introduced, with the focus being on the trend that most of all changed the rules of the game in the Chinese luxury market: digitalization. The chapter aims at presenting the main digital channels Chinese luxury consumers use and that luxury brands should exploit if they want to keep them, especially younger ones, engaged. The last part presents a case study that features the luxury brand Louis Vuitton is presented, with the aim of highlighting why some of its digital strategies have been successful in China and how the brand has been one of the pioneers in digital marketing in the Chinese market.