With borders reopened, there is a re-emergence of traveling consumers in markets around the world – a welcome sign by brands navigating a difficult economy.
The transition back to normality in the region following the pandemic is especially welcomed by luxury brands. According to research from Morgan Stanley, China’s reopening is expected to lift luxury goods sales this year and account for 60% of luxury spending growth by 2030. The report additionally said that two-thirds of Chinese consumer spending on luxury goods takes place outside of China.
To gain more insight into the luxury market in the region, we spoke with Adam Hershman, Vice President of Asia Pacific and the Middle East at TUMI, a luxury travel and lifestyle brand first founded in 1975.
Over the course of our conversation, Hershman talks about TUMI’s travel-oriented brand, how the physical store experience remains crucial in the consumer journey, offers advice for luxury brands looking to engage with the rising tide of affluent consumers in the region, how the luxury industry is faring in terms of sustainability practices, and more.
TUMI has a strong travel brand heritage. Previously you’ve described it as “innovation-driven”. Tell us more about that and what’s on the horizon moving forward.
With our DNA in travel, we have expertise in creating highly functional and durable products, and our customer-focused mentality has driven us to continuously improve and obsess with the details of how our products help top achievers get to where they are going. Over the years we have evolved beyond travel and into day-to-day bags, applying the same process of discovery and user-centric design.
“As indispensable as digital has become in the overall customer journey, we have never been so focused on our physical store experience as customers continue to show desire to immerse themselves in the brand and products in a physical space.”
We seek inspiration from our customers, constantly re-examining how they move and finding ways we can support them better on their journeys. Every season our design and product teams continue to evolve and enhance our products based on these insights.
We also continue to experiment with new products and materials specifically designed for communities where we can add value, such as esports or automotive, and incorporate learnings from these creative industries back into our broader range.
According to a recent report from Morgan Stanley, China’s reopening is expected to account for 60% of spending growth by 2030. What advice do you have for luxury brands looking to engage with this lucrative consumer segment?
To ensure long-term success in China, luxury brands must be about more than just great products – they must present inspiring ideas, experiences and values that align with the Chinese customer. Chinese consumers are now also more inclined to purchase in the home market, so having a strong, long-term domestic market strategy is more critical than ever.
For brands who are new to the market, success does not often come overnight so commitment and patience are critical. International travel is expected to make a strong comeback, so it is important to ensure stores in gateway cities are equipped to engage the traveling Chinese audience, especially in popular destinations. They need to think about accepting WeChat and Alipay, and having Mandarin speaking staff that are trained to take care of this customer. Ensuring the experience is unique, memorable and personalized will be important to captivating the Chinese traveler.
Aside from China, what other markets are the ones to watch for in the future for luxury?
South Korea is an obvious market to focus on, with the highest per-capita spending on luxury in the world and very broad cultural appeal driving interest in the country. The Korean customer is very brand-savvy and is seeking self-expression symbols, uniqueness and quality that luxury brings.
The Middle East is a region that has come on leaps and bounds, fueled by economic growth. While luxury brands are no strangers to the Middle East, it remained in the shadow of other markets like China and Korea over the last decade. It’s a complex and, at times, volatile region but has a young population, a lot of tourism potential and high-income levels, especially in Emirates like Dubai and Abu Dhabi.
“South Korea is an obvious market to focus on, with the highest per-capita spending on luxury in the world and very broad cultural appeal driving interest in the country.”
Southeast Asia is another area to watch. It is a populous region that has come on strong post-pandemic with high domestic spending and solid GDP growth. We have also seen lots of people from this part of the world travelling more and more. With many Southeast Asian countries having a strong inbound tourist appeal, there is a bright future for retailing in this region.
With increased consumer confidence in online shopping, especially from younger consumers, what trends are you seeing in destination shopping for luxury brands looking to keep up with evolving consumer preferences?
As indispensable as digital has become in the overall customer journey, we have never been so focused on our physical store experience as customers continue to show desire to immerse themselves in the brand and products in a physical space. Over the past year, brands have been rushing to update their physical store image to keep up with the customers’ demand for physical connection and in-person experience.
“Luxury brands now need to be present wherever their customers are, be it the physical or digital realm, and to provide them with the same levels of service, brand experience and storytelling.”
The digital space is still of course very important for us, especially considering digitally-native Gen Zs and Millennials are the fastest-growing luxury segment. Luxury brands now need to be present wherever their customers are, be it the physical or digital realm, and to provide them with the same levels of service, brand experience, and storytelling.
How would you grade the luxury industry overall in terms of sustainability? What are some ways it can improve?
Most luxury brands have expert craftsmanship roots, meaning they created incredibly high-quality products from the very beginning. This is a very solid foundation from a sustainability perspective because it means their products, both physically and aesthetically, are built to last.
Naturally, materials and technology have advanced over time and brands are incorporating these elements in different ways into their products and ecosystem. At its foundation, luxury has always been about quality, and I see the industry taking a meaningful leadership role in the future of sustainability.
What are some of your favorite luxury brand creative campaigns across the industry over the years?
I might be just a little biased, but my favorite campaign was TUMI’s collaboration with Hollywood actor, Chris Pratt, in 2019. We knew that Chris was a fan of TUMI so he was a natural fit for us. He came from humble roots and is now a high performer on an incredible journey that took him to Hollywood stardom and worldwide fame.
Coinciding with the premiere of his latest Avengers movie, we worked with Chris on some witty creative as well as having him appear at our regional event in Hong Kong. Media and influencers from all around the region flew to Hong Kong for the launch of the campaign at TUMI’s pop-up, and to meet Chris, of course. This campaign garnered huge attention for the brand, aligning it with one of the hottest actors at the time – who just happens to be a TUMI fan.
I also like the Moncler Genius platform for creation of products and curation of ideas. It really takes the idea of collaboration to another level, threading it through art and culture to reinterpret the brand via different artists’ visions.