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LUXURY RETAIL SERVICES: WHAT DO CHINESE CONSUMERS EXPECT?
The luxury industry worldwide, and in China in particular, has been going through some major shake-ups in the last few years, such as the impact of anti-corruption campaign in China since 2012, massive increase of Chinese out-bound tourists travelling abroad for shopping due to price advantages as compared to mainland China prices, changing customer preferences and low loyalty towards luxury brands, and heightened customer knowledge of luxury, to name a few. These changes have a direct impact on customers’ behavior and experience in luxury retail stores and ultimately the level of expectation and satisfaction they have with luxury brands. This paper aims to shed some light on this topic by focusing specially on Chinese luxury customers’ perspectives. Companies have considered customer experience as one of important ways to obtain and sustain competitive advantages. Zomerdijk and Voss (2009) maintained that customer experience is a holistic concept that encompasses every aspect of a company’s offering. However, it is unclear which service elements offered by company create the most compelling contexts. Chinese luxury customers represent one-third of the total personal luxury goods market by the end of 2016 according to Bain & Co (2016). Therefore, no luxury brand can afford to ignore Chinese customers and their level of satisfaction with their brands. Paradoxically, from 2012 to 2015, the luxury personal goods market in China has decreased by 1% or 2% each year as compared to the previous years. This was due to many factors, and one of them was “poor customer experience in retail stores” according to our study. This deceleration of the market in China has prompted many luxury brands to create new customer experiences that could increase satisfaction (such as made-to-order services) in order to retain existing customers and to gain new ones. The research questions of this paper are: what type of services do Chinese customers expect from luxury brands? What are the levels of satisfaction Chinese customers have with luxury brands abroad and in China? How can luxury bands improve their service experience offers to satisfy Chinese customers? In order to answer these questions, we carried out a longitudinal study over 4 years, from 2012 to 2015 with Chinese luxury customers. A Chinese luxury customer is defined as someone who has bought a genuine luxury product over the last 6 months, whether in China or abroad, for themselves or for someone else. Each year we interviewed 120 customers who were chosen randomly in the streets of Shanghai, nearby luxury malls. The interviews were carried out either in English (if they are comfortable of speaking in English) or in Mandarin (by a native speaker). The interviews lasted on average 30 minutes each. The questions are mostly open-ended questions such as: “Could you please tell us your best or worst experience in a luxury retail store, in China or abroad? And why is it the best or worst?”. The interviews were manually recorded by a second interviewer present at that time. The data were then compiled and analyzed for this paper. The findings of the study were somehow unexpected such as: 1- Chinese luxury customers expect very simple and basic services in luxury retail stores, such as a sincere smile and a warm welcome, or sales employees do not judge them based on their looks and appearances. 2- Retail staff should have a better and up-to-date product knowledge so they can answer simple questions about the products when asked. 3- Retail staff should be able to give good advice to customer when they are undecided, and not try push only sales. Managerial implications for luxury brands are many. However, the most important one by far is “to go back to the basics of retail customer experience” by selecting and training the right employees for the job.
