Gucci strikes China gold with ‘moonlight clans’ who spend it all

Bloomberg

Gucci’s brand is worth more than ever—thanks in part to young, spendthrift shoppers in China eager to shell out everything they earn on $2,900 velvet clutches or $1,400 crystal-studded sunglasses. The value of Gucci’s label jumped a whopping 66 percent, to $22.4 billion, in 2018, according to a report by Kantar Millward Brown. It helped that the Italian fashion house had its best-ever year. In fact, the top 10 luxury labels rose in value by 28 percent over the past 12 months, compared with a 4 percent jump the year prior, according to the consulting firm. Much of Gucci’s growth was driven by a phenomenon among Chinese consumers that sounds more like a biker gang than a shopping demographic.
“Moonlight clans” are groups of millennial shoppers bent on spending everything they earn on luxury goods, said Elspeth Cheung, global valuation director at Kantar’s BrandZ division. This new breed of spender represents a major cultural shift away from a more conservative consumer landscape in China. Now, as younger Chinese acclimate to President Xi Jinping’s vision of a nation with both abundance and opportunity, they’re beginning to react—and spend—accordingly. “The China Dream message was one of a stronger nation, with more equality, increasing income levels,” said Cheung. “It gave assurance to consumers that the future is bright.”
That optimism is driving a tremendous rise in luxury brand value, both in Asia and all across the world—and not just for Gucci. French fashion house Dior saw the second-fastest growth, up 54 percent, while brand values slipped slightly for Prada and Chanel, according to the report. Hermès, Burberry, Rolex, and Cartier also saw substantial growth. Saint Laurent was a newcomer to the top 10. Louis Vuitton, meanwhile, remains the most valuable luxury label at $41.1 billion. Yet no brand may be cashing in more than Gucci. Sales spiked 42 percent in fiscal 2017, to $7.2 billion, with growth spread across all categories—from satchels and clutches to sneakers. In fact, Kering rode the success of Gucci and Saint Laurent to its most profitable year ever. And Gucci’s momentum hasn’t stopped, with growth in the last quarter reaching 49 percent.
China was Kering’s second-fastest-growing market across all its brands last year, up 18 percent at comparable exchange rates. The company said in March that it had benefited from “renewed consumer confidence and supportive government policies.” The Asia-Pacific region accounts for more than a third of Gucci’s annual revenue.