How Tencent is Helping Fashion Luxury Brands Tap Into the Chinese Consumer Market

Updated: Mar 20, 2021

Now after the beating luxury brands have taken due to the coronavirus pandemic, Bain and Company predicts will strike off 20% to 35% of the personal luxury goods market in 2020 and McKinsey is on record for sales to shrink as much as 35% to 39%. “Bain & Company Luxury Study 2020 Spring Update” sheds light on how important China is for luxury players, as Chinese consumers will account for nearly 50 percent of the global luxury market — valued at €320-330 billion — by 2025. Bain predicts the luxury industry will recover by end of 2022 or early 2023 to 2019 sales levels of USD $304 billion and to do that, all eyes are on the Chinese to restore luxury brands’ fortunes with China as the industry’s only hope thanks to China’s speedy recovery from the COVID-19 lockdown and its vast generation of young and internet savvy consumers. According to Forbes, in 2019 Chinese consumers alone accounted for 90% of the growth in the personal luxury goods market or some €19 billion ($21 billion) in sales and generated 35% of global luxury spending; by comparison, American consumers generated only 22% of the industry’s sales and Europeans 17%, and their share of the market has declined from 27% and 30% respectively since 2000, while China’s share has grown from 2%.

Luxury brands are putting more and more resources into China’s booming mobile app WeChat, where they can sell products directly to more than 600 million users. Following the likes of Longchamp, Gucci, Michael Kors, Chanel, Coach, and Fendi, Burberry has become the next global luxury giant to open an official WeChat mini-program. Burberry is widely recognized as the most digitally savvy fashion house with its digital partnerships include Snapchat Discover, Apple Music, Instagram and WeChat. Burberry now uses WeChat to keep consumers be informed about new arrivals, trending products, promotions & deals, and even for customer service. This year, Burberry’s WeChat mini-program campaign takes the form of a social game in honor of Chinese Valentine’s Day (Qixi) which falls on on Friday 17 August 2020. Tencent and Burberry have produced a custom mini program that is unlocked via WeChat. Users create a profile and are given a digital avatar in the form of a cartoon fawn that hatches from an egg where shoppers can book one of the three themed fitting rooms, pre-select the clothes and play their own music while they try them on. Customers can also use this program to book a table at the in-house Thomas (Thomas Burberry) Cafe and make appointments with stylists and other services. To encourage engagement, the program has a rewards system to earn "social currency" that unlocks custom content, such as new characters and outfits for the animal avatar and exclusive dishes on the cafe’s menu. All the products have QR codes, which can be scanned to display more information and visual hints for styling and give the user more points for unlocking content. The interactive window display is currently a sculptural recreation of the runway for Burberry's Autumn Winter 2020 show. Mirrors and screens capture the movement of people as they interact with it, which users can capture and share with their phones. "Social media is an increasingly important part of the customer journey and the interaction between social media and physical surroundings is ever more seamless," said Burberry senior vice president of digital Mark Morris.

Based on their huge successes, more and more fashion luxury brands are turning to WeChat to tap in the ever powerful Chinese consumer market and all eyes are the ever-important China market.