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China has an economy which is cooling faster than had been expected and where government action to slow the giving of expensive gifts is affecting the consumption of higher cost leather items. The view that China was an endless growth opportunity to sell expensive leather goods never seemed realistic. Chinese consumers are not essentially ostentatious and were anyway already shifting towards experiences and connoisseurship.
A new report from Unity Marketing helps put some balance back. The world of luxury is not just about incredibly rich Asians. It notes that in the U.S there are twice as many millionaires as in the next ten countries combined. There are about 12 million U.S households with a net worth of $1m or more and they are remarkably ordinary. Only 4% have incomes over $1m while the majority are between $100k and $250. They shop in a wide range of shops including the big boxes and not that many regularly visit the luxury shops. They are far more likely to be self-made rather than have assets from inherited wealth: and they save rather than spend.
In this rush to meet the Chinese demand for luxury, which acceptably has served many brands very well, the definition of luxury has become so elastic as to be a stretch of the imagination. From affordable luxury to absolute luxury and everything in between rational thinking seems to have slipped out of window. Luxury that is recognised by being exclusive and scarce in general sits safely well positioned but the majority need a reset. Treating all their customers globally as though they were one high spending Chinese youngster is not going to work.
The American and European wealthy are mostly, but not exclusively elder, and even by age grouping and spending patterns they can vary a great deal. Product knowledge, the sources of information and the ways they purchase are all quite different. Before the changes in the 1980s consumers (that is many of today's' boomers) new more about trusted quality products than brand names.
Fundamentally the Unity document helps us define the role of leather wherever it sits in the market. Make for quality, build on the raw material's natural beauty and its technical foundations. Most of all be sure that leathers you make go into items made to last.
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