Think China's well-to-do shoppers spend precious hours deliberating how to drop that extra $20,000? Think again.
China's upscale shoppers are increasingly impulsive, according to a new report from consulting firm McKinsey & Co, which surveyed 1,000 Chinese luxury consumers in 14 cities during July and August this year. When asked how long they deliberated buying luxury bags, purses or wallets this year, 37% said less than a single day, up from 24% in 2010. For luxury watch buyers, 19% bought on impulse, pondering their purchases in less than a day, compared to 11% two years earlier.
Lavish impulse purchases are also more likely to happen on home turf. Chinese travelers, while accounting for nearly half of luxury items bought overseas, plan their shopping sprees, with only 15% spending spontaneously. Nearly 40% of shoppers on the home front are buying spur-of-the-moment indulgences, the study says.
The rise of the impromptu splurge has big consequences for luxury retailers, according to the report. On-the-spot Gucci gorges, Burberry benders and the like are done in shops, which means that the in-store experience is make or break. Skillful sales staff who know how to upsell and ask the luxury version of 'would you like fries with that?' are key, says Yuval Atsmon, a principal at McKinsey.
Poaching talented workers is all too common between luxury companies, but luxury firms will have to figure out a way to retain their assets, Mr. Atsmon said.
Many companies have already figured out the importance of employee retention. Closely held Ermenegildo Zegna Holditalia SpA executives have said that since the Italian fashion label was one of the first luxury companies to set up shop in China, in 1991, its rivals often attempt to steal away its employees. The company offers its employees a chance to work overseas and give them new opportunities in order to keep them.
Versace has launched a language training service to help its Chinese workers improve their English and work up the ladder to become managers.
Many companies have also already begun tapping into in-store impulses and are rolling out VIP services for their prized spenders. Companies such as Burberry PLC have started hosting private shopping experiences for their preferred clients.
New York-based Affinity China runs luxury shopping tours for groups of high-level Chinese consumers, offering them exclusive experiences. Last January it organized a private fashion show at Bergdorf Goodman's Fifth Avenue store and a meet-and-greet session with bigwig designer Oscar de la Renta.
Rolling out the red carpet will continue to be important, the McKinsey study said. By 2015, Chinese consumers will account for 34% of the more than $175 billion luxury goods consumed world-wide.