Beckham and Royals help UK luxury brands dominate
07 May 2014
Britain’s culture helps the country’s luxury brands outperform its global rivals in emerging markets new research has found.
A survey of Chinese consumers in Shanghai, Beijing and those that travel thousands of miles to the UK to shop at places like Harrods, Harvey Nichols and House of Fraser by Professor Qing Wang, of Warwick Business School, found that ‘Britishness’ was an important reason they chose to buy brands like Johnnie Walker, Aston Martin, Rolls Royce, Burberry and Gieves & Hawkes.
The emerging nouveaux riches in China is a huge market that luxury brands are targeting and preliminary research has found that Britain’s cultural capital represents a number of unique qualities that is difficult for competitors in France, Italy or the US to imitate.
When asked what the Chinese consumers associate with Britishness, not surprisingly, the Royal family came top of the list, followed by David Beckham, the Football Premier League and the 2012 London Olympics.
TV programmes and movies like Downton Abbey, the Harry Potter films, Sherlock Holmes, James Bond and BBC News also had a huge influence on the Chinese perception of Britishness, and so does the British elite education system represented by Oxbridge and the public schools.
Professor Wang, who will be presenting the preliminary findings of her research at The Geography of Luxury: East, West and Global Directions conference at University of Warwick this week, said: “Luxury goods are defined as those satisfying hedonic rather than functional needs and our research has found this is an area that Britain enjoys a distinct advantage in.
“A very important factor that makes Britain standout is that it incorporates tradition and innovation seamlessly.
“Put differently, Britain’s advantage lies in the so-called soft power, which is defined as the ability to get what you want through attraction rather than through coercion and cultural heritage is a key part of that. The extent of its impact is hard to measure and even harder to replicate. As China promotes its own soft power, it has increasingly turned to Britain for inspiration.”
The love of British luxury goods in China and other emerging markets is all too clearly demonstrated by the sales figures. For example, Diageo derives about a third of its profits from Scotch whisky brands, driven by demand in China, India and Russia, making Diageo the world's biggest Scotch whisky producer.
Jaguar Land Rover, the UK’s leading manufacturer of premium luxury vehicles, saw sales in China up 39 per cent in January 2014. Similarly, annual revenues at Burberry hit £2 billon for the first time in 2013 thanks mainly to sales in China jumping 20 per cent year on year, with the fashion retailer set to open eight more stores in the country this financial year.
Navdeep Athwal, a doctoral researcher in Warwick Business School’s marketing group, found in a separate study, which is funded by the ESRC and will also be presented at the conference, that the lure of luxury spreads into other consumer segments.
“There is a trickle-down effect from the tailor-made luxury product segment with high price tags and exclusivity benefits to other consumer segments where more affordable and mainstream luxury goods are offered,” said Miss Athwal. “Members of luxury goods consumer-led virtual communities seek to emulate the behaviour of their elite counterparts and to gain the same levels of status and recognition."
Professor Wang, who is director of MICEE (Marketing, Innovation & the Chinese & Emerging Economies) and part of the Leverhulme Luxury Network, said: “Yet this trickle-down effect of conspicuous consumption to middle-class consumers is threatening the very essence of luxury being exclusive.
“Emerging markets like China and India offer huge potential for luxury marketers where advertising efforts should focus on ‘selling the dream’ and creating stronger ties with the super-rich. For luxury firms across the world, unique and customised product offerings combined with exquisite craftsmanship and the British association will continue to drive sales in emerging markets.”
The Leverhulme Luxury Network looks to understand the history of luxury and the importance it has assumed in contemporary society for the business, marketing and creative sectors.
Academics from all over the world including Columbia University, Max Planck Institute in Berlin and the London College of Fashion will be speaking at The Geography of Luxury: East, West and Global Directions plus Andy Parker, Jaguar Global Marketing Communication, and Financial Times associate editorLifen Zhang.
Professor Qing Wang teaches Buyer Behaviour on Warwick Business School's undergraduate courses.