Consumer Behaviour Fashion Insight Report

Consumer Behaviour Fashion Insight Report

Student ID: 15457995 BA (Hons) Fashion Marketing Year 2 Researching Consumer Behaviour & Psychology

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Contents Executive Summary Introduction Indonesia United Kingdom Pen Portrait Indonesia United Kingdom New Luxurians Secondary Research Demographic Psychographic Behavioural Primary Research Conclusion & Recommendation Consumer Insight Boards References Appendix

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Executive Summary This fashion insight reports explores two markets- Indonesia and the United Kingdom. The New Luxurians is the targeted segment in this report. They are people new to buying luxury goods, male or female aged 18-30. This report analyses the similarities and differences of the two countries, using secondary research which looks at demographic, psychographic and behavioural facts. Demographic is used to look at the size of each market and its attractiveness to a potential brand entering the country.

Hofstede Insights for psychographics shows the contrasting difference, which is the level of individualism. Indonesia is very low, which means they like to conform to society. Also its indulgence level is low, meaning brands must appeal to the practical side of product design. While behavioural looks at whether people prefer to shop online or in-store. The main takeaway here is that Indonesia still prefers to shop in-store, as online methods are not reliable, as discussed in the primary research.

This report conducted two interviews, one person from each country, for its primary research. It gave in-depth insights on the motivations and behaviours of the new luxurians. The key findings for Indonesia is that customers prefer to purchase accessories such as bags and shoes, rather than clothing.

This is because they are influenced by local influencers, wearing local designers. They are also heavily influenced by their friends, as their individualism level is low and have a pattern to ‘follow the herd’.

Being a country with a majority of Muslim citizens, according to the interview, this does not intervene with the way new luxurians dress.

The main points gathered through the interview for the UK is that there are more options on how to buy luxury. For instance, new luxurians are able to ‘enter’ the market by using pre-owned goods e-commerce Vestiaire Collective or sample sales. Furthermore, the male luxury market is also growing.

The recommendations concluded for this insight report is if a fashion brand is to enter the Indonesian market, they need to consolidate their social media presence and reach out to local influencers, as they are the ones who has the power over young millennials. It is also recommended for a brand to enter the market starting with an accessories line such as bags, to test the market, and continue with a clothing line. As for the UK, a brand must have a wide range of styles and options for males and females.

The new luxurians in the UK also opt for a ‘more subtle’ signs of luxury, which means no over-the-top display of logos.

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Introduction Indonesia Indonesia is a country full of potential, with complex consumer market, scattered over 17,500 islands where tastes and preferences vary (McKinsey & Company, 2013). With its rapid urbanisation rate from 53% in 2013 and forecasted 71% in 2030, spending of upper-middle class will grow in categories such as leisure and apparel. The country has a huge wealth gap, one of the most significant in the world, with its richest 10% owning roughly 77% of the country’s wealth (Indonesia’s Rising Divide, 2016).

While e-commerce luxury sales in Western countries such as the United Kingdom grows exponentially, Indonesia’s affluent consumers still prefers store-based retailing. This will be explained further through primary research.

This report will discuss Indonesia’s demographic and behavioural facts, as well as the country’s psychographic using the Hofstede analysis. Primary research consists of behavioural analysis of one Indonesian new luxurian that will illustrate the market even further.

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Its biggest consumer cities are Jakarta, Surabaya and Bandung. Fashion brands considering entering the luxury market in Indonesia should focus on those cities, mainly Jakarta. The city is undergoing a development, where consumers are becoming more aware of less-mainstream luxury brands. Long-standing brands such as Gucci and Louis Vuitton are challenged with less mainstream luxury brands (Euromonitor International, 2017).

The continued growth of a middle class that once hardly existed, coupled with increased individual spending power and a greater awareness of trends and brands, is creating a nouveau middle class eager for aspirational products to show off their knowledge and wealth. - LS:N Global, 2012

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Introduction United Kingdom London is known to be the fashion capital of the world. According to McKinsey Fashion Scope (2017), London ranks number 3 as the largest fashion market for clothing and number 5 for footwear. By 2018, global digital sales for women’s luxury fashion are expected to grow from 3% to 17% of the total market, $12 billion in size. Its biggest markets are the US, Germany and UK, with expected growth is 18% (McKinsey & Company, 2015).

With e-retailers such as Net-a-Porter and Matches Fashion offering easy returns and next-day delivery, the UK consumers are confident in purchasing luxury items online. In a developed country like the UK, switching from in-store to online shopping experience is made possible with advanced logistics and urban infrastructure.

The urban population is 83.1% as of 2017, a contrasting difference with Indonesia’s 55.2% (CIA: The World Factbook, 2018)

There is a shift in consumer attitudes towards the meaning of luxury. According to a report by WGSN (2017), as millennials hit financial maturity, they are uninterested in displaying wealth with luxury brands’ logos, as they opt for “the subtle signal of wealth”.

This report will discuss United Kingdom’s population and shopping preferences and how it differs from the Indonesian consumer.

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The UK’s fashion industry is worth £26 billion & 800,000 to the economy. - British Council, 2016

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Pen Portrait Indonesia

Source: @kethagustine

Cindy Santosa, 25 Hobbies: Pilates, zumba and tennis Income: ÂŁ4000 per month, through her business Favourite places to eat in Jakarta: Havana, Sofia at Gunawarman and Cork & Screw Favourite cities to travel to: New York, Hong Kong and Tokyo Favourite gallery in Jakarta: Biasa Artspace Favourite fashion brands: Gucci, Dior and French Connection Wardrobe staple: A pair of Valentino heels and Gucci Dionysus bag

She graduated from Binus Business School in Jakarta, Indonesia and started her own business. She is the co-owner of a popular local cosmetics brand, Rollover Reaction. She rents an apartment with her best friend of 7 years.

She was born into an affluent family, thus she was exposed to the luxurious lifestyle from an early age. She travels a lot, mostly every summer with her family and friends. As a business owner, she’s able to have flexible working hours and works mostly from her laptop.

She is constantly on social media, browsing for make-up trends to improve her brand.

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Pen Portrait United Kingdom

Source: @lenaperminova

Karla White, 27 Hobbies: Psycle, travel and photography Income: ÂŁ40,000 per year Favourite places to eat in London: Hakkasan, Oka and Foxlow Favourite cities to travel to: Paris and Milan Favourite galleries in London: Wellcome Collection and Barbican Centre Favourite fashion brands: Chanel and Chloe Wardrobe staple: A pair of Isabel Marant boots and Marc Jacobs sunnies

Karla developed an interest in photography in her first year of university. She started taking pictures of her lifestyle, outfits and holidays. As her Instagram followers grew, she decided to pursue blogging seriously. Independent brands in Instagram are starting to notice and approach her for sponsored posts. She has a stable job at a PR company in Marylebone. Her job allows her to travel to Paris almost every Fashion Week. She graduated from Greenwich University, majoring in communications.

She lives with her two cats in Vauxhall.

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The New Luxurians In this fashion insight report, a new luxurian means a 18-30 year old male or female, living in a busy and urban city. They appreciate clothing and accessories with exceptional quality and style their luxury items in a tasteful way. They are considered as ‘new’ as their interest in purchasing luxury goods are at an early stage. Although they are exposed to the luxurious lifestyle while growing up, they are starting to develop their own taste and preferences as they enter university and adulthood.

A new luxurian is someone who is well traveled, sophisticated, driven and educated. They might purchase items as frequent as once a week, or once per month, for something special such as a bag. Although they still prefer traditional luxury brands, such as Prada, Louis Vuitton and Balenciaga, they are willing to experiment with new exciting labels. The prestige of those traditional luxury brands are what attracts them to luxury.

A ‘luxury’ item could include things from make-up, perfume, bags, shoes and clothing. It could also mean a lifestyle, from the travelling they do, restaurants they go to and the homeware of their houses. However, this report will focus mainly on the new luxurians in terms of fashion.

Source: Balenciaga AW16 Campaign

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Source: Marc Jacobs Fall ‘16 Campaign

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econdary Research

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Demographic Indonesia

Indonesia’s population is more than four times United Kingdom’s. However the wealth distribution in Indonesia is much larger, thus the making the segment size smaller. According to LS:N Global (2014), Indonesia’s middle-class boom means the spending power is also growing. With the rise in wealth comes growth in luxury sales. This creates a huge opportunity for luxury brands to enter and grow their presence in the country.

According to Wealth-X’s World Ultra Wealth Report (2017), United Kingdom ranks 5th and Indonesia ranks 22nd (see Appendix 1).

The ultra-high-net-worth (UHNW) individuals are those with $30 million in assets or more (Business Insider, 2017). Although the UK’s UNHW population is 4.5 times as many as Indonesia’s, its year-on-year change in wealth is declining. Indonesia shows a promising 9.6% growth in population and 4% increase in wealth. More growth in wealth means more spending on luxury items.

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Demographic United Kingdom

Selling luxury to new luxurians in the United Kingdom not only target women but also men.

They are becoming more fashion aware and are very forward thinking in terms of dressing themselves. According to WGSN (2018), manbags have hit a tipping point where they are now mainstream rather than a niche. Senior fashion analyst Tamara Sender stated that Mintel found that young men favour buying aspirational labels for themselves (WGSN, 2018)

This being said, the estimated 12 million people in the segment have a significant amount of male compared to Indonesia’s male to female ratio. This is one of the main takeaway of the difference between Indonesia’s and the UK’s demographic within the market.

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Psychographic Hofstede

A huge significant difference between Indonesia and the United Kingdom could be seen through ‘Individualism’. Its the “degree of interdependence a society maintains among its members” (Hofstede Insights, 2018). With a low score of 14, Indonesia’s individuals are expected to conform to the ideals of society. In reference to Robert Cialdini (2009), this could be linked to social proof- follow the herd. If a fashion brand is to enter the market, they have to appeal to a group of people in order to be favourable to more people. Indonesians tend to follow trends in social media that are approved and also followed by their peers.

Another contrasting difference between the two countries is “Indulgence”. With a high score of 69, this shows that British culture is classified as ‘indulgent’, whereas Indonesia with a score of 38 is classified as ‘restraint’.

This means that Indonesians do not put much emphasis on leisure time while the Brits has a higher degree of optimism and value leisure time, as well as spend money as they wish.

This analysis shows that in order to appeal to the Indonesian market, brands must not only satisfy the ‘wants’ but also the ‘needs’ of the consumer. An example is to deliver products that are practical, modern and user-friendly. The products should not only fulfil the materialistic desires, but also provide a solution to a problem the consumers might have.

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Behavioural Online or in-store ?

Figure 1: Internet Penetration

Figure 2: Growth in Internet users, year on year change 2017 vs 2016

Based on a report published by We Are Social (2017) (see Appendix 2), this section will explore consumers’ preference between shopping online or in-store in both countries. With only around 50% of Indonesians population using the internet in 2017 (Figure 1), the growth is the highest in the world, with 51% compared to the previous year (see Figure 2).

The graph on the left shows the percentage of the national population who purchased something online in the past month, based on a survey (We Are Social, 2017). Only 41% of Indonesians are active e-commerce users, meanwhile UK has 76%. This shows that the Indonesian population are either not as confident in purchasing online, or simply that they are not motivated enough to do so, as the alternative is more attractive to them, which is buying things in-store. It has perks such as being able to feel and touch the items and directly owning the item.

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Source: Celine Fall 2012 Campaign

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rimary Research

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This insight report conducted two interviews; one person for each country. The 2 participants fit the criteria for ‘new luxurians’. Both started to develop an interest in luxury goods in the past 2 years. This primary research gives a more in depth insight on the behavioural and motivational aspects on why they purchase luxury fashion, their reasons in doing so, as well as what influences them. This does not represent the luxurian demographic as a whole, but will showcase how a portion of people think about luxury fashion.

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Indone When did you start to purchase luxury fashion?

At the start of university, which was 2 and a half years ago.

How much do you spend per month?

Around £900 a month. However when I buy a bag its definitely more than that. I also tend to spend a lot more when I travel abroad, because I can apply for a tax refund. A lot of people I know prefer shopping abroad because of that.

What items do you most frequently purchase (i.e. trousers, bags, jumpers, coats)?

Shoes and bags. I don’t really buy clothing from luxury brands. And forget coats! Its always too hot for that. Though I do have a few, for when I travel.

What is your shopping habit (i.e. per week, per month or on special occasions)?

For luxury items maybe four times a month, so thats once a week. Sometimes more if I’m in the mood.

For luxury items, do you prefer shopping online or in store? Why? In store definitely. In Indonesia, online shopping is not that reliable and I don’t trust the system enough to spend £700+ for a bag to be delivered to me! The only luxury shopping websites in Indonesia that I know is Reebonz and Bobobobo (see Appendix 3). I’ve bought a couple of things from Bobobobo- A.P.C, Rag & Bone and Off-White but I would say they are mid-range luxury. I had a great experience with the website the first time so I would buy from them again.

But if I was to buy a Gucci bag, I would definitely go to a store.

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esia What motivates you to buy an item (i.e. social media, friends, celebrities, fashion week, blogs, passing by a store)?

Instagram bloggers or friends. My friends are luxury enthusiasts too so we basically like the same things. I remember a year ago the Marc Jacobs snapshot camera bag was booming here, because Ayla Dimitri (@ayladimitri), a very famous Indonesian influencer, used it in her Instagram photos. Everyone I know started using it too so I bought one for myself at the end! I follow both Indonesian and Western influencers. I prefer Indonesian influencers though, as they promote things that are easily accessible for us and up and coming local designers.

What do you think about Indonesian luxury fashion?

I think a lot of Indonesian designers with a luxury price point like Toton, Biyan and Calla (see Appendix 4) are growing and is becoming more popular among young luxurians. They incorporate Indonesian heritage to their designs, so we feel proud when we wear it, especially in special occasions such as weddings and family gatherings. In terms of occasion wear, Indonesian designers are more favourable than international labels. I think we’re nationalistic and would want to display that. However in terms of casual wear, I prefer mid-range brands for clothes and then accessorize with a bag or a pair of shoes from a luxury brand.

Indonesia has a lot of customs and traditions, and 87.2% of the people are muslim (Central Intelligence Agency, 2018). Do you think this affects the way people aged 18-30 dress?

It depends on which class you are in. For my friends and I, upper-middle class millennials, it does not affect us at all. We are pretty much westernised, we even have a term for it, “Islam KTP”, which means we are muslims on our ID cards, but doesn’t necessarily follow all Islamic traditions and practices. I think a lot of people are like that, especially people who live in the main cities like Jakarta and Bandung.

(Tiara S. interviewed by author, 2018)

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United Ki When did you start to purchase luxury fashion?

Around 2 years ago. I started to realised that owning one luxury item is better than a couple of high street items. I recently saved up for a Louis Vuitton wallet and I think it’s totally worth it, because it has the classic monogram and it will last a long time.

How much do you spend per month?

It really depends. Some months I go without purchasing luxury at all. I would say £800 every 2 months for luxury goods.

What items do you most frequently purchase (i.e. trousers, bags, jumpers, coats)?

Clothing, especially in sample sales. There’s always sample sales happening in London so I’d go every chance I get!

What is your shopping habit (i.e. per week, per month or on special occasions)?

On average per 2 months and also on special occasions like birthdays. But for clothing I would say per 3 weeks or so, depends if something is on offer or not.

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ingdom For luxury items, do you prefer shopping online or in store? Why? Both. I love Vestiaire Collective (luxury resale e-commerce), I can get luxury fashion for a portion of the original retail price. However I also like shopping in store, I think nothing beats shopping in store, especially for luxury, the overall service and atmosphere contributes to the experience. I think people who shops luxury online at websites such as MatchesFashion are really busy people! My mum shops there just because she doesn’t have the time to try things on in one shop to another. But for me personally it’s part of the fun.

What motivates you to buy an item (i.e. social media, friends, celebrities, fashion week, blogs, passing by a store)?

It starts of from social media. I love Aleali May (@alealimay) in Instagram. She mixes Jordans with Chanel and streetwear with luxury accessories. Her bag collection is insane and I always look up to her for styling ideas. I also look at fashion week street styles in Vogue. I like to collect images as ‘inspirations’ and create my own ‘wishlist’ in my phone.

How much research do you do before purchasing an item?

It depends on what item I want to purchase. I’d check Vestiaire Collective first, if not I’ll go to the brand’s store. If I found what I like then I’ll save up to buy them in a few weeks time, or if I really like them I’ll get them straight away.

(Sharmayne A. interviewed by author, 2018)

Conclusion &

RECOMMENDATIONS

Motivational Insights

Behavioural Insights

Indonesia The new luxurians prefer bags and shoes rather than clothing, when purchasing from an international luxury brand. This is due to preferences and cultural values.

Its recommended that if a brand was to enter the market, they should start with products such as bags and shoes, and if they have proven the concept, they could release their clothing line.

They prefer to shop in store rather than online, as they are not confident in doing so. This is proven by the lack of online transactions (We Are Social, 2017).

Their individualism level is low, they like to ‘follow the herd’. This is apparent through the interview as well as Hofstede Insight.

They need a luxury e-commerce that is trustworthy- so the market could grow and customer confidence grows in purchasing fashion online They value Indonesian designers as they incorporate Indonesian heritage, a recommendation would be if an international brand was to enter the market, they could collaborate with an Indonesian artist or influencer.

They need their peers approval before buying an item, whether its from Indonesian social media influencers or their friends. A brand must create on some kind of buzz on social media to get their attention.

United Kingdom They are confident in buying luxury items online.

With resale luxury e-commerce such as Vestiaire and sample sales regularly happening, the new luxurians have other options in ways of purchasing luxury.

They are intelligent and conscious shoppers, some are even uninterested in wearing over-the-top designer logos. According to WGSN (2017), they opt for subtle signals of wealth. A recommendation would be in order to appeal to this market, brands should focus on the aesthetics, structure and design rather than the use of logos.

The new luxurians are highly indulgent.

They purchase items for the ‘feel good’ factor, and they value leisure time.

As luxury is easily accessible, through online and in store, a new luxury brand must have a ‘wow’ factor in order to appeal to this market.

As the male luxury market is growing, it is recommended that brands must realise the opportunity and deliver to satisfy those needs.

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Consumer Insight Boards

Indonesia

United Kingdom

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References British Council. (2016). The Power of Fashion. [online] Available at: https://www.britishcouncil.org/organisation/policy-insight-research/insight/power-fashion [Accessed 1 Feb. 2018].

Business Insider. (2017). The number of super-rich ‘ultra-high net worth’ people in the world is growing. [online] Available at: http://uk.businessinsider.com/wealth-x-super-rich-report-increase-in-wealth-numberof-ultra-wealthy-2017-6 [Accessed 6 Feb. 2018].

Central Intelligence Agency. (2018). People and Society: Indonesia. [online] Available at: https://www.cia. gov/library/publications/resources/the-world-factbook/geos/id.html [Accessed 10 Mar. 2018].

Central Intelligence Agency. (2018). The World Factbook- Indonesia. [online] Available at: https://www.cia. gov/library/publications/the-world-factbook/geos/id.html [Accessed 1 Feb. 2018].

Central Intelligence Agency. (2018). The World Factbook- United Kingdom. [online] Available at: https:// www.cia.gov/library/publications/the-world-factbook/geos/uk.html [Accessed 1 Feb. 2018].

Cialdini, R. B. (2009) Influence: The psychology of influence. Revised ed., New York, Collins.

Euromonitor International. (2017). Luxury Goods in Indonesia. [online] Available at: http://www.euromonitor.com/luxury-goods-in-indonesia/report [Accessed 30 Jan. 2018].

Hofstede Insights. (2018). Country Comparison. [online] Available at: https://www.hofstede-insights.com/ country-comparison/indonesia,the-uk/ [Accessed 5 Feb. 2018].

Index Mundi. (2017). Population. [online] Available at: https://www.indexmundi.com/factbook/fields/population [Accessed 1 Feb. 2018].

Indonesia’s Rising Divide. (2016). [ebook] The World Bank. Available at: http://www.worldbank.org/en/news/ feature/2015/12/08/indonesia-rising-divide [Accessed 30 Jan. 2018].

LS:N Global. (2012). Indonesia Market. [online] Available at: https://www-lsnglobal-com.arts.idm.oclc.org/ markets/article/6197/indonesia-market [Accessed 30 Jan. 2018].

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References LS:N Global. (2014). Indonesian Market grows amid Asian luxury slowdown. [online] Available at: https:// www-lsnglobal-com.arts.idm.oclc.org/big-ideas/article/15142/indonesia-market-grows-amid-asian-luxury-slowdown [Accessed 30 Jan. 2018].

McKinsey & Company. (2013). Understanding the diversity of Indonesia’s consumers. [online] Available at: https://www.mckinsey.com/global-themes/asia-pacific/understanding-the-diversity-of-indonesias-consumers [Accessed 30 Jan. 2018].

McKinsey & Company. (2015). The opportunity in online luxury fashion. [online] Available at: https://www. mckinsey.com/business-functions/marketing-and-sales/our-insights/the-opportunity-in-online-luxury-fashion [Accessed 1 Feb. 2018].

Sharmayne A. interviewed by author. (2018) The World Bank. (2017). GDP (current US$). [online] Available at: https://data.worldbank.org/indicator/ NY.GDP.MKTP.CD?locations=GB [Accessed 1 Feb. 2018].

Tiara S. interviewed by author. (2018) We Are Social. (2017). Digital in 2017: Global Overview. [online] Available at: https://wearesocial.com/uk/ special-reports/digital-in-2017-global-overview [Accessed 12 Feb. 2018].

WGSN. (2017). Cultural Capital: The Subtle Signals of Wealth. [online] Available at: https://www-wgsn-com. arts.idm.oclc.org/content/board_viewer/#/74850/page/1 [Accessed 13 Feb. 2018].

WGSN. (2018). Young British men switch on to man-bags, now a key accessories category. [online] Available at: https://www-wgsn-com.arts.idm.oclc.org/news/young-british-men-switch-on-to-man-bags-now-a-keyaccessories-category/ [Accessed 8 Mar. 2018].

World Ultra Wealth Report. (2017). [ebook] London: Wealth-X. Available at: https://www.wealthx.com/report/exclusive-uhnwi-analysis-the-world-ultra-wealth-report-2017/#downloadform [Accessed 30 Jan. 2018].

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List of

Illustrations Page 1. Fashion Gone Rogue. (2017) Balenciaga Draws The Curtains for Spring 2017 Campaign. [Photograph] Available at: https://www.fashiongonerogue.com/balenciaga-spring-2017-campaign/ (Accessed: 20 February 2018) Page 6. Ketrin Agustine. (2017) 19 August. [Screenshot] Available at: https://www.instagram.com/kethagustine/?hl=en (Accessed: 4 February 2018) Page 7. Lena Perminova. (2017) 4 October. [Screenshot] Available at: https://www.instagram.com/lenaperminova/?hl=en (Accessed: 4 February 2018) Page 8. Dazed Digital. (2016) See Demna Gvasalia’s debut Balenciaga campaign. [Photograph] Available at: http:// www.dazeddigital.com/fashion/article/31830/1/see-demna-gvasalia-s-debut-balenciaga-campaign (Accessed: 1 February 2018) Page 9. Fashion Gone Rogue. (2016) Cara Delevigne, Missy Elliot Front Marc Jacobs’ Fall 2016 Campaign. [Photograph] Available at: https://www.fashiongonerogue.com/marc-jacobs-fall-2016-campaign/ (Accessed: 1 February 2018) Page 12. Hofstede Insights. (2018) Country Comparison. [Graph] Available at: https://www.hofstede-insights.com/country-comparison/indonesia,the-uk/ (Accessed: 13 February 2018) Page 14. The Philophiles. (2013) Celine Fall 2012 Campaign. [Photoraph] Available at: http://thephilophiles. blogspot.co.uk/2013/01/celine-fall-2012-campaign.html (Accessed: 1 February 2018)

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Appendix 1

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Appendix 2

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Appendix 3 Luxury Indonesian e-commerce site- Bobobobo and Reebonz

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Appendix 4 Luxury Indonesian designer labels- Calla and Toton