Upper-middle-class aspirational shoppers are not the only positive indicators for luxury and lifestyle retail. The Asian demographic has become a major driver for the growth for luxury brands, a trend that is only expected to pick up steam thanks to ready sources of income from countries like India, China and Iran.

1. Asian Buyers Inject New Life Into Canadian Luxury Industry
Canada is on it’s way to becoming a hub for the luxury markets with several upscale retailers
opening stores in the country. The question these luxury retailers have is whether there is
enough potential to satisfy the supply. Many brands such as Saks, Nordstrom, Tory Burch,
Versace and Bvlgari are optimistic and investing in the industry.
Now that Canadians have a greater reason to shop domestically, it will play a strong role in
supporting the stores and brands. Possessing proportionally fewer high-income earners than
the US, it might not seem to justify the investment these brands have made. The Canadian
luxury industry still has potential as a popular tourist shopping destination.
Canada’s Best Customers
Upper-middle-class aspirational shoppers are not the only positive indicators for luxury and
lifestyle retail. The Asian demographic has become a major driver for the growth for luxury
brands, a trend that is only expected to pick up steam thanks to ready sources of income from
countries like India, China and Iran. Chinese customers have made over $65 billion of luxury
purchases in the past decade, according to a McKinsey & Company report. Changes to
Canada’s immigration policy in the past few years mean that a huge number of emigrants too,
mostly Asian, have created an entirely new demographic to cater to.
With income levels no longer being the best indicators of potential, retailers are trying to gain
more data with another indicator: The tourist industry. 2017 was a landmark year for Canadian
tourism with a record 43 million visitors to Toronto, spending $8.8 billion. Following the US,
China was the second highest source of tourists with strong future growth indicators for the
visitor economy. Coming along as a huge incentive to brands, retailers are looking at specific
markets with higher disposable incomes and tourist areas. These brands might be new to
Canada but they are seeing that a significant number of Asian tourists visit Canada and making
valuable purchases.
Asian Spending Habits
The massive amount of retail sales generated by Asian tourists in Canada is a hard number to
estimate, given fluctuations in time location and consistency. However, the opportunity is
undeniable with luxury brands looking to offer value such as social status and personal identity.
Key to doing so is understanding the difference between Western and Eastern cultures.
These differences go beyond language or seasonal celebrations. Asian cultures differ even
amongst themselves as motivations and buying decisions vary widely. Indian luxury consumers
are heavily affected by the opinions of others and look for societal acceptance, which leads to
groups, rather than people, directing purchase decisions. China, on the other hand, without any
marketing to create a relationship, look to possess the quality that the luxury brands represent
and are willing to pay for it.

2. It is a common practice for tech-savvy and aware Chinese tourists to travel to Western countries
like Canada and make luxury or lifestyle purchases. Their luxury purchases are made subtly as
they are not allowing to purchase or advertise luxury brands in China. With government
intervention fuelling demand, tourists buy such products overseas from countries like Canada.
Adapting to the Market
Last year, local retailer Holt Renfrew invested $400 million to renovate and expand stores
across Canada, with a focus on luxury apparel and beauty brands. The stores will feature 75
luxury concessions that include brands like Chanel, Gucci, Fendi, Louis Vuitton, Dior and
others. Aware of the latent demand that exists amongst the Asian demographic in Canada,
luxury brands know that visitors have an appetite for luxury goods and retail stores and are
taking steps to make their stores more appealing to Asian consumers -
● Store designs are mirroring designs of upscale Asian department stores, stocking them
with product styles and brands that appeal to Asian consumers and payment facilities
that enable easier transactions.
● Asian customers are relatively loyal and prefer to build relationships with sales staff. This
means that hiring the right employees has a great impression on the targeted segment.
● Luxury brands should consider hiring staff that understands the home countries
preferences and are both Canadian and Asia cultures and trends.
● Sales representatives are being chosen for their language abilities, cross-cultural
experience and relationship building qualities to connect better with customers.
Future Forecast
While it might be convenient to treat each demographic the same way, the reality is that same
messaging does not work across every market. Communication and marketing will need to be
tailored to the culture and consumption patterns of that particular emerging market
demographic.
As per EY-Parthenon, the premium segment will grow by 6 % from 2016-2020, a higher growth
rate than the predicted 3.4% for the luxury segment. However, expected growth rates for the
shoes and accessories category is a resounding 11% and 6% in the luxury segment. Applying
these insights, strategies and services will require someone familiar with the culture to
customise and emphasize what consumers are looking for and identify the best channels to
reach out to them.
It will be interesting to see the direction the Canadian luxury and lifestyle industry assumes in
years to come. Will the demand continue to remain strong or will brands have to diversify or
redirect their efforts? In all this, Asian tourists and their spending power hold the answer to the
direction the market will take.