THE MASSTIGE PARADOX IN CHINA: A BUSINESS MODEL INNOVATION OPPORTUNITY FOR INDEPENDENT LUXURY COMPANIES?

Abstract

Over the years, luxury has built-up a reputation as recession proof industry. Even though the industry growth has slowed down in the mid 2000s, luxury firms have managed to cope with economic contingencies and shortening traditional demand by widening their clientele base to prestige mass consumption-the masstige clientele. Doing so, luxury firms have been pursuing a dual strategy by wooing aspirational consumers as well as their traditional elite customers, thus managing the challenge of handling both a differentiation strategy based on scarcity and uniqueness, and increased volumes of sales. This has been a trend in mature markets such as Europe, the United States and Japan, but was significantly fostered by expanding into emerging markets. Sector specialists thus expect China to remain a major structural growth area in the medium term, where the number of both high-end clients as well as new aspirational consumers will substantially increase and influence firms strategy.