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Future Consumer and the Four Cs
14 Plays4 years ago
Asian consumers and women will drive the future of consumption. Erwan Rambourg, HSBC Global Head of Consumer and Retail Research, looks at future consumer trends and what he calls the Four Cs of luxury goods: Consolidation, Chinese, Channels and Conscience. This episode was recorded on Wednesday, June 30 2021. Disclaimer
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Transcript
Introduction to HSBC Global Viewpoint
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This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
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Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
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Thank you for listening.
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Hello, everyone.
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Welcome to this HSBC Global Research LinkedIn Live.
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I'm Piers Butler, Head of Global Research Direct.
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connecting you to our world-class research.
Exploring the Future Consumer Theme
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Today's LinkedIn Live is on the future consumer.
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It's one of the nine key global themes that HSBC Global Research is focusing on.
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We have 30 minutes and we aim to finish on time and it is all about you asking us your questions on this theme.
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So I'm gonna introduce our guest,
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Erwan Ramburg is joining us today to talk about this theme.
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Erwan is a veteran analyst at HSBC.
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He heads global research for consumer and retail.
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In his own capacity, he's a top-ranked analyst and has been for the last 10 years in luxury and sporting goods.
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Before he joined HSBC, he spent eight years in the industry, in the luxury goods industry.
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And amidst all of that, and I don't know how, he's managed to write not one, but two books.
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In 2014, he wrote The Bling Dynasty.
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And last year, amidst the pandemic, he published Future Locks.
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Erwan, welcome.
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Thanks a lot for having me, Piers.
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Good to see you again.
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I thought we'd just get the ball rolling by looking at the four Cs.
Chinese Consumer Influence on Luxury Sales
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So C stands for the Chinese consumer.
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You've written many times on the importance of the Chinese consumer.
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I guess everybody knows that.
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But how important is the Chinese consumer going to be going forward?
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So we actually put a short survey on LinkedIn asking respondents what percentage of sales of luxury the Chinese consumer would represent by 2025.
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Just to begin with, there's no right answer.
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It all depends how you define luxury.
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But the way we look at luxury pre-COVID,
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Mainline Chinese consumers accounted for about 40% of luxury sales.
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And by 2025, we see that creeping to around 50%.
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So if you look at the answers, you had 30 to 50% or more than 50%.
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We're basically at that 50% mark.
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And again, it all depends on how mature you are, how developed you are.
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There are
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sub-sectors of the industry in luxury that are more exposed to the Chinese consumer, notably watches, for example, others that are less exposed if you think about fragrances or handbags and accessories.
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But basically what counts is the direction of travel and this idea that the Chinese will weigh significantly more over the next five years.
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Short term, we've seen very positive surprises in the U.S.
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But I have to say that we believe mainland Chinese consumers have a sort of compounding nature with a lot of wealth creation coming and obviously a lot of changes linked to COVID as well.
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We've seen repatriation of growth, which started basically about a year or two before COVID.
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But like with anything, COVID-19 has been an accelerator of trends and the vast majority of purchases are now taking place at home.
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But yeah, in aggregate, we're seeing Chinese consumers
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accounting for about half, if not slightly more, of luxury purchases
The Future of Luxury Retail
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by 2025.
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Now, C is also for channels.
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You mentioned COVID-19 as an accelerator of trends.
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It clearly was an accelerator in terms of online activity, online purchasing of goods.
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Does that mean that the high street no longer has a role to play?
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What is the outlook there?
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I know I'm a lot more optimistic than that.
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I believe in the future of brick and mortar.
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But obviously it very much depends on your brand positioning, on your business model, on the subsectors you're looking at.
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If I go back to luxury, you know, most of luxury purchases are with first time purchasers and you're spending quite a bit of money.
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So you'd like to probably speak to a human being.
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You'd like to touch and feel and try or smell the product.
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I think it's quite different with categories of consumption, which are more driven by repeat purchases.
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So here I'm thinking about sporting goods.
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I'm thinking about cosmetics.
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You know, the leader of sporting goods, Nike, for example, is already at 35% online.
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And they recently said that they would quickly go to more than half of their business online.
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That's credible because again, the price points are relatively affordable.
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you're more in a repeat purchase market.
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Similarly in cosmetics you're looking at more accessible price points there would be a logic for online to become dominant.
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In luxury it's slightly different.
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Again as long as we remain in a sector that's essentially driven by first-time purchasers the store still has a future.
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There are a lot of jobs to be created, there are still a lot of boutiques to be opened if you're looking at luxury.
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And C stands also for consolidation.
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And you think that consolidation is going to accelerate.
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Why is that?
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Well, I think this is a thought that we
Market Consolidation and Consumer Trends
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had pre-COVID.
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But again, here, an accelerator, you've had a consumer attitude, which is, you know, buying less, buying better.
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and that's been clearly very supportive for the leading brands.
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And actually within the leading brands, it's been very supportive for the so-called hero products, the best-selling items.
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And bigger brands have been clearly outperforming in this time of crisis.
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And what it means is that essentially scale matters.
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And so if you're a small independent company, you're gonna be under pressure to find ways to remain relevant, and you might be eventually seeking financial backing.
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The other element that I would point to is that this is a seller's market and the multiples are high.
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And if the multiples are high and scale matters and you're small and independent, this might be the window of opportunity for you to basically find that backing.
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And so we've had a lot of comments on the luxury side.
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around the LVMH Tiffany deal with a lot of investors and observers mentioning that this was the last big deal of a decade.
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I think it's the first big deal of the upcoming decade.
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I believe that indeed M&A will be more and more visible in the next months.
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And finally, C is for conscience.
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How have consumers changed their expectations versus the brands in terms of what they expect from them
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obviously climate change, but latterly on social and governance issues.
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Yeah, I think this is a time of doubt.
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This is a time of crisis.
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This is a time where consumers are a lot more thoughtful.
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And in many sub-sectors of consumption, they're spoiled for choice.
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So it's not just about logos.
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It's not just about products.
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You are looking for values.
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You're looking for purpose.
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You're looking for what the brands are...
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doing for your community.
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You're looking for a sense of a bit of depth, right?
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And so you've started to ask quite a few questions around how are you producing as a brand?
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What are you doing with obsolete inventories?
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How are you thinking about the planet?
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How are you thinking about topics such as traceability, transparency?
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What are you doing for me?
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And at the end of the day, are you a trustworthy company?
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Do we share the same values?
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Do I respect what you do in terms again of environmental issues, social issues, governance, management structure,
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All of these questions are coming to the fore because again, I can choose as a consumer between a very important number of brands.
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And so I wanna make sure that I actually connect with the values of the brand, not just their products and the functionality.
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So thank you very much for that overview.
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Let's dive into the
Evolving Luxury Status Symbols
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questions.
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First one that's just come through, are luxury status symbols moving from tangible assets
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to intangible assets.
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I think that refers to the, what is it, the NFTs, non-fungible tokens?
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Well, I think it could be NFTs, or you can also interpret the question around experiences.
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I think for quite a long time, you've had investors wondering whether the younger, the new generation would have an interest in luxury and whether they would not move away from luxury because they were more going to experiences.
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And we've had the question also around what we have called the staycation reversal risk.
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So this idea that you were stuck at home under COVID conditions for the past 12, 14 months.
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You didn't really spend on flights or hotels or fancy restaurants or nightclubs.
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And you spend on stuff, on items, on things, on products.
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And so, you know, there is this theoretical risk that as the world reopens, you might be spending less on items and more on experiences.
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I think the doubt around the relevance of luxury products for the young generation have been countered, partly because young people spend eight to 12 hours a day on devices and the image that they project on social media
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whether it's TikTok, Instagram, Facebook, et cetera, actually counts.
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And the brands they're associated with will send a message across.
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But I think the question here is, will you be moving from products to experiences?
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And the short answer is no.
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I think what we've seen with COVID-19
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is a proper K-shaped recovery, i.e.
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people who were struggling pre-COVID are even more struggling now, unfortunately.
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People who were well off pre-COVID are doing a lot better still after a year.
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There's been a lot of wealth creation.
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And so there is no arbitrage.
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As the world reopens, and the world's been reopened now in mainland China for more than a year,
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It feels here in the States that the world's been reopened for two, three months already.
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There is no negative inflection in luxury.
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It's not an either or.
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It's not an arbitrage.
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You can go back to a nightclub.
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You can book flights.
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You can go to that Michelin star restaurant you were dreaming about.
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You can go to that hotel and you can still buy a nice handbag to look good while you're at it.
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So for the time being, it's not an either or equation.
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Right.
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The next question comes back to this channel point that we touched upon.
Post-COVID Retail Experience Innovations
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How different will bricks and mortar look like in a post-vaccine world?
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Yeah, well, give me a reason to move up from my sofa is essentially the answer.
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So it's an illusion to think that the store pre-COVID is valid for this post-COVID era.
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You need education.
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You need entertainment.
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You need to tell me a story.
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You need also to give me the impression that I haven't been here before.
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That's a lot of pressure for brands.
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If I am under the impression of déjà vu, as the Americans put it, it's not going to work for me.
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I don't want to go to a Cartier, a Vuitton, a Nike store, having had the impression that I have seen this before.
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Every single store needs to be pretty unique.
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That's why you see the development of pop-up concepts.
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That's why you're seeing the development of flagships that have
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this degree of entertainment, education, or services that I might not find in another store.
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So again, it's going to be costly, it's going to be difficult, but it's going to be fun.
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And, you know, go back to the reality that if I take the example of luxury, no one needs luxury.
00:11:56
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You know, luxury serves no purpose whatsoever except to put a smile on my face when I'm waking up in a bad mood on any given morning.
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So give me that smile.
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Give me that opportunity of escapism.
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give me a reason to leave my home.
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If the service in store is dull and if I can order online, I have no incentive to go to stores.
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So again, the stores of tomorrow better be lively, better be entertaining, better enable me again to escape from my daily routine.
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Well, I'll be there.
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There's another question on channels here, which is...
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In terms of China, we have one of the largest luxury markets in the world, but still have less than up-to-date trend drops compared to the US or the EU market.
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Why is that the case?
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I think that's changing.
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I think a lot of brands are looking at China first.
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We've seen examples, you know, if you look at Cartier, for example, the leading luxury jewelry company, they actually launched a big product last year in watches in China first before they rolled it out in the West.
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I think this idea that Chinese stores are less attractive in terms of assortment,
00:13:21
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in terms of services, in terms of knowledge of the sales associates, in terms of the layout, I think that's a bit antiquated.
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I think actually mainland China stores are probably the best, gradually becoming the best in the world.
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The difficulty today is three, four years ago, a lot of mainland China flagships in luxury were looking a bit like empty showrooms.
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You went to look at products and eventually you knew that you would be buying abroad.
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Now you're buying at home.
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And so those empty showrooms have filled up relatively quickly to the point where there could be a bit of an issue linked to service, you know, because a lot of the stores are packed.
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And so brands are looking at ways to accommodate those incremental flows.
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But they're also looking at CapEx investments.
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You know, gradually you will be looking at entering new cities.
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Gradually you'll be looking at reinforcing the existing clusters in Beijing and Shanghai, for example.
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But the idea that
00:14:21
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somehow mainland China stores are inferior to Western stores.
00:14:25
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I don't believe it's the case anymore for most of the ad performing brands.
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So questions come back on this point on M&A consolidation.
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Why, again, re-asking the question a little bit on why do we think that M&A is about to accelerate, but in particular, I guess this must have some impact on the targets.
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Do you think the consumer will start mixing luxury with health and sustainability?
00:14:53
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Well, sustainability is at the heart of every discussion, whether in the consumer space or not.
00:14:59
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You know, I think it's not a fad.
00:15:03
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It's not a fashion trend.
00:15:05
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It's a generational shift.
00:15:06
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It's basically, again, young consumers asking tougher questions.
00:15:13
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As far as health and wellness, clearly.
00:15:17
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I mean, health and wellness, especially under COVID-19 conditions.
00:15:22
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Unless you're French like I am and living in France and you think the administration is gonna help you or your employer is gonna help you.
00:15:30
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If you're based in the US, if you're based in China,
00:15:32
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which at the end of the day are bound to remain the two biggest consumer markets, health and safety under COVID-19 conditions have been front and center.
00:15:43
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And we've seen the emergence of meditation apps, literally
00:15:47
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apps where you can hear Matthew McConaughey or John McEnroe help you literally fall asleep.
00:15:52
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People are ready to pay up for that.
00:15:53
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I know it sounds crazy, but it's true.
00:15:55
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You've seen the emergence of concepts like Lululemon.
00:15:59
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You have seen clearly an interest to live healthier lives, you know, whether it's working out, whether it's eating healthy food, whether it's sleeping, you know, that's what I've called the trinity of health.
00:16:12
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Usually people forget the sleeping part, but if you don't have all three, it doesn't really work out that well.
00:16:16
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But yes, you're seeing spending being diverted towards health and wellness.
00:16:22
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I'm not going to pretend to tell you that spending on a meditation app means that you won't be spending on
00:16:29
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you know, a Tiffany ring or a Gucci handbag.
00:16:33
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It's again, it's probably not an either or, but you're targeting the same wallet.
00:16:37
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You are targeting the same wealthy consumer.
00:16:40
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And at the end of the day, I think a lot of the luxury groups that we see are likely to invest in health and wellness, whether it's via their fragrance and cosmetics divisions or whether it's via spas or experiences or hospitality, for example.
00:16:56
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Question, I guess back on channels and notwithstanding what you said on the physical stores, having a future, how do you envisage the evolution of personalization being translated into retail and in particular digital
Mass Customization in Retail
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ways of selling?
00:17:11
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Yeah, I think personalization online is feasible, but obviously you don't exactly get the same amount of service and of education and of understanding of a brand.
00:17:24
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But there is already a lot you can do, you know, whether it's changing color waves.
00:17:29
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If you look at, you know, Nike ID, for example, or if you look at many, you know, handbag manufacturers where you can
00:17:37
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change colors, put your initials, make it a bit more your own.
00:17:41
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I think the magic of luxury in the future will be mass customization.
00:17:47
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So this idea that you're looking at companies that might be producing millions of, whether it's handbags or watches or whatever you're into, and at the same time, give you the illusion that you're the only one.
00:18:00
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And that functions via hypersegmentation.
00:18:04
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Whether it's hypersegmentation on the product side,
00:18:07
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in terms of communication, when you're getting an email from a company or you're getting a text or WhatsApp or anything else, you will gradually live under the illusion that you're the only one, that you're quite unique, that you're treated quite in an exceptional manner.
00:18:25
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And that is enabled by CRM data knowledge.
00:18:29
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I think knowledge is power.
00:18:32
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And I think the big change over the past decade
00:18:36
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in the luxury industry has been knowing who you're actually selling to, knowing what moves her, knowing what pleases her, knowing what type of colors she's into and sizes, et cetera, et cetera.
00:18:48
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So I think you can personalize products online.
00:18:52
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You can do a lot more in terms of telling the story and really making people come back in a direct relationship.
00:19:03
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Ironically, this period of COVID-19 has enabled luxury and other sub-sectors to have a more direct relationship with their end clients.
00:19:14
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Ironically, it's thanks to tech and data that you are now closer to the human being who's telling you the story, which I think is a fantastic silver lining.
00:19:25
Speaker
Coming back to conscience, there's a question here asking us,
00:19:33
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What are the questions being asked of brands?
00:19:35
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And I guess I wanted to maybe add to that, that this aspect of conscience brings, does it not, an element of risk to companies?
00:19:45
Speaker
Because there have been some notable examples of mistakes that brands have made in communicating to their consumers and misjudging their expectations.
00:19:55
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Yeah, I think when you're global and you're about growth and you're very creative, you're bound to make some mistakes and you're bound to ruffle some feathers or displease a particular age cohort or a particular nationality.
00:20:13
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To your question, what are the questions asked?
00:20:15
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I think it's essentially around how do you produce your goods?
00:20:20
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in respecting the environment.
00:20:23
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And what's the afterlife?
00:20:24
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We're getting a lot of questions around second hand.
00:20:26
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We're getting a lot of questions around, it's great to produce a lot of ready to wear, but what happens if you're selling t-shirts that people wear twice and then it ends up in a landfill?
00:20:37
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I think that's really a big issue.
00:20:40
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It can seem incompatible
00:20:43
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to go after growth and at the same time respect the planet.
00:20:45
Speaker
But look at what Patagonia has been doing.
00:20:47
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You know, Patagonia has been telling you, don't buy our products too often.
00:20:51
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And they've gained a lot of share by doing that.
00:20:54
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You know, so again, it sounds a bit contradictory.
00:20:58
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But if you are doing the right thing, clearly you'll be drawing more consumers.
00:21:03
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So I think the afterlife, the second hand or the, you know, how products end up,
00:21:11
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is a recurring question.
00:21:13
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You had a former Hermes CEO who used to say that luxury is what can be repaired.
00:21:19
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So again, think about secondhand, think about how do you elongate, how do you increase the lifespan of a product.
00:21:29
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And at the end of the day, this sort of buy less, buy better actually feeds into luxury.
00:21:32
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You know, do I need a lot of different dresses that are cheap, but at the end of the day, I'm only wearing twice and I'm chucking?
00:21:40
Speaker
Or do I need something that's quite exceptional and that I will keep for a very long time?
00:21:45
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So that's, you know, that's the sort of trade off.
00:21:48
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Apart from environmental issues,
00:21:51
Speaker
I think you have issues that are linked to governance, that are linked to communication, you know, corporate communication.
00:21:58
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And you have some issues that are also linked to social welfare.
00:22:03
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So again, linked to how are you treating your employees, how are you reflecting the communities you're selling to?
00:22:10
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You know, it's quite unfortunate, but still a lot of the management teams within consumer companies
00:22:16
Speaker
look a bit like me, you know, they're old and white and male, and don't necessarily reflect the actual communities they're selling to who tend to be more diverse, who tend to be younger, who tend to be Asian, to a certain extent.
00:22:28
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So again, it's trying to find a way to reflect, to be a mirror, basically, of the communities you're selling to.
00:22:37
Speaker
We have a question on the CIFAR Chinese.
Hong Kong vs Mainland China in Luxury Market
00:22:41
Speaker
How do you see the relevance of Hong Kong as part of China's luxury market post-COVID, comparing with other first-tier cities in the mainland in Hainan?
00:22:52
Speaker
I think Hong Kong has gone through a very tough few years.
00:22:59
Speaker
I think there was a hope about a year ago of a sustainable rebound.
00:23:04
Speaker
And I think many observers were saying, you know, Hong Kong is very volatile, but always comes back.
00:23:09
Speaker
I'm not sure I share that enthusiasm because we have seen very important developments in mainland China.
00:23:16
Speaker
We've seen the emergence of Hainan.
00:23:18
Speaker
I mean, at HSBC, we were already publishing reports about Hainan seven, eight years ago.
00:23:24
Speaker
Hainan, as you might be aware, is this island south of the mainland, which a lot of people call the Chinese Hawaii.
00:23:34
Speaker
And that has become this duty-free zone where if you're traveling from other cities in the mainland, you're actually able to get prices that are comparable to the prices in Hong Kong.
00:23:47
Speaker
I think Hainan is emerging as a very important substitute in terms of
00:23:52
Speaker
you know, being a sort of shopping mecca relative to Hong Kong.
00:23:55
Speaker
So unfortunately, I mean, there is a lot of wealth with the local Hong Kongese, and that actually justifies having quite a few stores still.
00:24:02
Speaker
But as far as being helped by Chinese mainlanders, I think Hong Kong is structurally going to be a more limited contributor to sales in terms of premium consumption.
00:24:18
Speaker
Sort of technology question on channels, but let me pitch it to you anyway.
Blockchain and Luxury Market Opportunities
00:24:24
Speaker
Do you think this wave of interest around blockchains and similar technologies will bring value to brands?
00:24:29
Speaker
I guess part of that is the authenticity point and forgery point.
00:24:33
Speaker
Do you think that that's going to be a factor?
00:24:36
Speaker
Absolutely.
00:24:36
Speaker
I mean, there was a recent announcement in the luxury sector of
00:24:42
Speaker
Aura, which is this consortium around blockchain, where you have brands like Cartier, brands from the LVMH group and the Prada group also, you know, participating.
00:24:53
Speaker
I think blockchain can be incredibly powerful.
00:24:55
Speaker
If I go back to the comment that I was making around secondhand, I think blockchain
00:25:02
Speaker
as a, again, you know, making you sleep at night in terms of I'm buying an actual authenticated product.
00:25:09
Speaker
I can trust the validity of this product.
00:25:14
Speaker
I think once you have the means to authenticate products, if you think about the resale market, if you think about secondhand, there's a lot that can be done.
00:25:23
Speaker
For the time being, luxury secondhand is mostly driven by
00:25:28
Speaker
third party partners or retailers, you know, people like the RealReal here in the US or people like Vestiaire Collective in Europe.
00:25:37
Speaker
I think if, you know, luxury brands are about control, blockchain should enable them eventually to take care of secondhand sales themselves.
00:25:45
Speaker
And that will be incredibly powerful in terms of
00:25:48
Speaker
recruiting new consumers, getting the data, controlling storytelling aspects.
00:25:55
Speaker
And so blockchain is absolutely relevant for the consumer space overall, but for luxury specifically, yes.
00:26:01
Speaker
You mentioned sustainability as one of the key factors that future consumers look for.
00:26:07
Speaker
What else could be looked at as key factors for the future consumer?
Storytelling in Luxury Branding
00:26:11
Speaker
I think, again, it's your capacity to tell stories and to draw in
00:26:18
Speaker
people to continue to recruit.
00:26:22
Speaker
Again, I think of the luxury sector essentially as a sector that is driven by recruitment.
00:26:29
Speaker
And so what will you do to incentivize up and coming consumers to be drawn to your brand?
00:26:37
Speaker
And so again, it's for now about scale.
00:26:40
Speaker
It's for now about your capacity again to
00:26:44
Speaker
develop products and communication and retail experiences which enable wealthy consumers to again think about the world differently and escape from their day to day.
00:26:56
Speaker
You have quite a few crowded markets if you think about watches or if you think about cosmetics or if you think about handbags and accessories but if you have a different voice you will capture a disproportionate amount of market share.
00:27:12
Speaker
And then you have
00:27:13
Speaker
you know, less crowded markets, I'm thinking of jewelry where, you know, you have a few, a handful of specialists, a handful of generalists, and there, it's a subsector, which, you know, I think is, has great growth ahead.
00:27:28
Speaker
So, you know, you either have a very differentiated voice in a crowded market, or you find a market that's less crowded, and you try to, you try to dominate that.
00:27:38
Speaker
Right, final question.
00:27:39
Speaker
Obviously, there's been a lot of savings accumulated during the sort of lockdowns as people haven't been able to go out.
00:27:45
Speaker
A lot of excitement about sort of post-COVID going out there and spending.
00:27:50
Speaker
Do you think people are over optimistic
Sustainability of Luxury Market Growth
00:27:52
Speaker
about that?
00:27:52
Speaker
Is there going to be a post-COVID bump and then it will all fall flat or will the momentum continue?
00:27:58
Speaker
I think we're going to have to land at some stage, right?
00:28:01
Speaker
But I think the landing will be very gradual.
00:28:05
Speaker
You know, if you look at the US market, for example, you can be incredibly optimistic thinking you have recruited a lot of, again, first time purchasers.
00:28:14
Speaker
They might be sticky, they might come back, but more importantly, they might influence others.
00:28:19
Speaker
There was in this market, you know, post 9-11 and post the global financial crisis, something that was called the guilt factor by many brands.
00:28:27
Speaker
It was seen as inappropriate or vulgar to spend on labels.
00:28:31
Speaker
I think that guilt factor has gone away to a certain extent.
00:28:34
Speaker
and has been replaced by what some have called the survival trade.
00:28:38
Speaker
So this idea that, you know, I've been through this period of 12 or 14 months, I've survived this, I'm allowed to reward myself.
00:28:45
Speaker
So you can have a very bullish view on, you know, how sustained this growth can be.
00:28:49
Speaker
On the other side, you have to bear in mind that you had a few macro elements that have supported this wealth creation.
00:28:56
Speaker
You've had equity markets being very supportive.
00:29:00
Speaker
You've had the secondary home market being incredibly supportive.
00:29:03
Speaker
To your point, you've had staycationing.
00:29:05
Speaker
You know, I'm not, it's beyond my pay grade.
00:29:08
Speaker
Obviously HSBC has a view on equity markets.
00:29:10
Speaker
I don't, I just look at consumer.
00:29:12
Speaker
But if the equity markets stall for some reason, or if the property market in the US has a bit of a hiccup, or if, you know, staycationing ends, theoretically, you're gonna have to land at some stage.
00:29:24
Speaker
Now, the question is, do you land
00:29:26
Speaker
at a sustainable growth rate, which is at six or 7% or do you land at 13, 14%?
00:29:32
Speaker
That's the big question.
00:29:34
Speaker
But I'm a true believer in the capacity of brands to continue to recruit, but obviously the trends you're seeing short-term clearly are not sustainable.
00:29:43
Speaker
It's off the charts.
00:29:44
Speaker
Okay, I'm gonna break my golden rule.
00:29:46
Speaker
We're gonna go one more question and we might slightly run over, but it's such a great question.
00:29:50
Speaker
New consumers are important, but demographics are going into the other direction.
00:29:54
Speaker
All the segments are buying experience and money in the context of hyper-segmentation.
00:29:59
Speaker
Doesn't this make sense to venture more into the elderly luxury
Youthful Luxury Markets and Aging Consumers
00:30:03
Speaker
markets?
00:30:03
Speaker
You can only really just briefly touch upon it, but I just want to make sure we- Yeah, I mean, interestingly, in luxury, with the exception of the Japanese consumer, you're recruiting very young.
00:30:15
Speaker
And the fortunate thing is the modal age in both mainland China and the US, which are the two key markets, are very low.
00:30:21
Speaker
In China, I think it's about 31 years of age, and in the US, it's about 26 years of age.
00:30:26
Speaker
You are seeing some recruitment in Japan with retirees who are leaving the
00:30:33
Speaker
the labor market with a lot of money to spend.
00:30:38
Speaker
But that's a bit the exception.
00:30:39
Speaker
I think luxury is driven essentially by the willingness to fit in, the willingness to be part of the club.
00:30:45
Speaker
And that happens at a pretty young age.
00:30:46
Speaker
And yes, you're right.
00:30:48
Speaker
China will be aging like other markets.
00:30:51
Speaker
But for the time being, the modal age of both mainland China and the U.S. are quite supportive for this industry.
00:30:59
Speaker
On that very positive note, Erwan, thank you very much for joining us today.
Conclusion and Future Invitations
00:31:03
Speaker
Thank you all for your questions.
00:31:04
Speaker
I'm sorry if we didn't get to answer all of them.
00:31:06
Speaker
There were just so many.
00:31:07
Speaker
They were coming in at a rate of nods.
00:31:08
Speaker
So thank you for your participation.
00:31:10
Speaker
Once again, thank you very much and see you on the next LinkedIn Live.
00:31:17
Speaker
Thank you for listening today.
00:31:18
Speaker
This has been HSBC Global Viewpoint Banking and Markets.
00:31:23
Speaker
For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.