After the pandemic, consumption shows a trend of polarization;
meanwhile, the consumption structure and people’s consuming tendencies are also changing.
By Fifi Kao
Recently, there have been a few new cases of Covid-19 in China, but thanks to the strict and efficient anti-pandemic measures taken by the government and citizens, the economic and social life are little influenced. Economic activities proceed as normal.
The survey conducted by SpaChina shows that, after the pandemic, spa consumption in China has shown a trend of polarization and the consumption structure and spa goers’ consuming characters are also changing.
Most customers in China have become more cautious about their spending due to the pandemic. They postpone unnecessary expenses, in other words, “luxury consumption”. Unfortunately, spa falls into this category. However, the situation is not completely bleak for us. Instead of cutting off all spa experiences, customers now invest more on products that they trust. Generally speaking, they will visit spas with strong brand awareness and integrity, and buy products they believe to be safe and effective.
Therefore, it’s a time that brand image have the final say. Every spa brand must strive to become the “default option” in the minds of consumers. Your brand must be implanted in consumers’ sub-consciousness and become their first choice without thinking.
Single young consumers born in the 1990s and 2000s have become a rising force in the spa world. They desire to be pretty, seek fun, are health conscious, pursue stimulation, love to post photos on social media, and share everything they like with others. They are not the bargaining type. They demand a cool appearance, high quality, brand reputation, and everything that can give them a sense of satisfaction. They want things that can show their identity and lifestyles. These young people are driving the upgrade of consumption urbanization and digitalization. They are extending the consumption upgrade to four new aspects: mental consumption, knowledge consumption, health consumption and intelligent consumption.
Consumption as a way to pursue mental pleasure
In this consumption era, spa consumers spend money not only to solve skin problems or improve health, but also to acquire mental pleasure. The pursuit of a better life translates into mental relaxation, self-growth, healthy lifestyle, access to intelligent technology, and cultural nourishment…
Now it’s time for spa operators to target Gen Z and discerning consumers by actively exploring their needs, and even becoming one of them so as to more deeply understand their consumption habits.
Gen Z refers to those born between 1995 and 2009. They seek after new technology and call for living in the present. They are willing to invest in skin care products with advanced or organic ingredients. They put “good looking” in first place. They long to realize self-development and therefore desire to explore unknown areas. They are fond of studying the ingredients and efficacy and are attracted particularly by organic and essential oil products. Moreover, they like funny, good-looking and delicious healthy snacks. Spas can surely prepare more healthy food or nutritional supplements to meet their needs.
The current population of Gen Z in China is about 149 million, of which about 64% use e-commerce platforms every day. Data shows that the disposable income of Gen Z reached 3501 yuan per month in 2018, higher than the national per capita disposable income of 2352 yuan of the same year. Gen Z has undoubtedly become the backbone of Internet consumption in China.
So, what kind of products can win their hearts?
Appearance justifies. They demand beautiful, cool and fashionable things. To look good is the pre-condition for them to further explore the functions of products. When products meet their aesthetics, they will invest more and show more tolerance.
Combining with big IP (intellectual property). Since 2019, IP brand marketing has become a trend. Big IP means good content that crosses time and country boundaries. In fact, there is no lack of good IP in the international spa industry. However, it’s surely not easy for spas, which are used to providing services and programs, to create innovative marketing approaches. At this moment, the right spa product partner can help a lot. You will be able to carry out attractive IP marketing by taking advantage of your partner’s platforms and resources. Some excellent Chinese distributors can further localize international IP. If spas and beauty salons can perfectly combine their wellness and beauty programs with brand IP, they will certainly give the market a greater space for imagination and expectation.
Products being interesting. Interesting interaction design has expanded and increased the spread of products. Interesting products are more able to grab the eyes of consumers. If you can do this, it means your brand marketing is almost surely successful. Gen Z is willing to spend a lot of time on things they find amusing. To be interesting is very important. If a things make them happy, they will not hesitate to pay the bill.
ACG (animation, comics, and games) culture is prevalent among China’s Gen Z. They are keen on buying the derivatives like chic shoes or “mystery box” toys. Sixty percent of E-game fans are Gen Z. They also contribute nearly 40 percent of the sales of cosplay products.
Save time. Gen Z is generally more “lazy” and self-centered. They are only willing to waste time on “worthy and interesting” things. If products or services can help them save time and energy in doing the things that they don’t like yet cannot avoid, they will surely embrace such offerings. Therefore, spa can consider providing healthy lunch or afternoon tea/coffee which look pretty and is of high quality to help the customers save more time. They will certainly praise the idea.
Identity Approval. Gen Z pays attention to labels that can distinguish their personality and community of belonging. Only when they think this spa or treatment is fit for their identity will they be happy to frequently visit. This requires spas to think one step further in the process of spa design and brand positioning.
SPA should pay even more attention to discerning consumers. Discerning consumers embrace positive values, pursue and lead high-quality lifestyles, and have their distinctive consumption symbols. The number of discerning consumers in China reached 116 million by 2018. They are the group of consumers who lead further consumption upgrades in China, and turn “quality consumption” into “discerning consumption”. Discerning consumers focus on every detail of consumption and have their own unique taste. Only quite ingenious products and services can touch their hearts.
They lead the change in consumption directions: from wanting more to wanting less, and then to wanting the better; from function focus to emotion focus; from high physical price to psychological premium; from following others to showing oneself. Therefore, in order to really win the discerning consumers, it’s not enough for spas to just “cover” and “reach” them, but to be integrated into their lifestyles, and reach a cultural resonance and value identity with them.
“Discerning consumers” is a concept which integrates sociology, consumer behavior and communication, and contains different levels of meaning. Firstly, it means “selective”. Such group of people are gathered together due to a shared hobby and sense of value. For example, the members of a certain fitness club is a typical “discerning consumer” group because, obviously, they frequent the same business district and choose the same membership club. The second level of meaning is “elite”. The discerning consumers are the creators and leaders of trends. Thirdly, it connotes “exquisite”. The discerning consumers pay attention to the brand message, the cultural connotation and the spiritual significance of the products. Last but not the least, it also means “wise”. Discerning consumers are wise because they only seek to interact with honest, sincere and down-to-earth business persons and buy their products.
Discerning consumers have their appointed therapists for nail and eyelash beauty. They are loyal to certain skincare product brand once they make the choice. They like to reach the weigh-loss goal step by step by following the plan. They don’t want to share slippers and towels with others when in spas or beauty salons. And they are proud of telling others of their favorite spas.
The discerning spa consumers show an even stronger preference in what to choose. For example, they use only natural and organic products, they seek cutting-edge skincare treatments and they desire true pampering and relaxation. Their preferences may drive the further business segmentations in the spa and beauty salon industry, as well as become an indicator of future consumption trends. It is also believed that in the near future more and more young people will join the Discerning Consumer group.
Rapid Consumption Upgrade
Since Gen Z has become the main consumption force, some of the “daily necessities” in the past, even including some “low-end” categories, show an obvious trend of consumption upgrading.
Young consumers’ interpretation to “cost performance” is no longer “cheap and useful”, but “worthy of such a high price”. A call for “new delicacy”, “new fashion” and “new way of healthy life” is leading the wave of product and brand upgrading. There are several key words for China’s consumption upgrading in 2018 and 2019: “family first”, “self-care”, “balanced life”, “exquisite quality” and more.
The McKinsey Report on China’s Consumers 2020 shows the “personalized” and “differentiated” consumption trends of different consumer groups.
In big cities with high living costs such as Beijing, Shanghai, Guangzhou and Shenzhen, different consumer groups show distinctive characteristics: some are more rational and pay particular attention to cost performance and practicality; some are more cautious in making purchase decisions; and others prefer to cut down expenses so as to save money for potential needs in the future. But on the whole, the total consumption amount hasn’t changed much. Moreover, due to the reduction in travel expenses, many people are willing to invest more in other luxury products and services, including SPA and beauty salons.
Now we see a new consumption force rising up represented by young women in second-tier cities. They are from well-off families and don’t have the concept of saving money or reducing costs. They have strong willingness to buy.
McKinsey focused on Chinese consumers in one of its reports issued in 2020, and put forward five consumption trends worthy of attention: firstly, the emerging consumption force in second and third tier cities has become a new engine of growth; secondly, consumption classification has shown up; thirdly, the concept of healthy life continues to be popular; fourthly, tourism consumption lays more emphasis on experience; fifthly, local high-end brands are on the rise.
Shortly after the report came out, the coronavirus pandemic broke out. Now we can clearly see, except for the prediction for tourism consumption (details of experience is sometimes ignored due to the surging number of people for domestic travel), the other four predictions are all fulfilled, even to a larger extent due to the pandemic.
Although China’s economic growth has slowed due to the pandemic and is facing uncertainties, the respondences of spa consumers give a clear hint that beauty salon and spa business will continue to grow, and 95% of the spa / beauty salon respondents express their confidence in the business performance in 2021. Consumers’ consumption motivations have already changed from “solving problems” to “pursuing the meaning of life”, from “using products” to “enjoying life”, from “convergent consumption” to “personalized consumption”, from “material pursuit” to “spiritual satisfaction”, all of which means a consumption upgrade with spiritual significance.