BEIJING: Growth in China's luxury market has slowed sharply and consumption is shifting towards women's categories, forcing brands to rethink their approach, according to a new report.
The China Luxury Goods Market Study, from consultancy Bain & Co, said that the luxury market grew at just 2% in 2013, compared to 7% a year earlier, and that a similarly low figure was expected for 2014.
The Chinese continue to be enthusiastic shoppers for luxury items, reported China Daily
, but around two thirds of such shopping was now done abroad, a trend which had led to a slowdown in domestic store traffic and store openings.
In all, Chinese buyers accounted for 29% of the global market in 2013, an increase of four percentage points on a year earlier.
The increasing prominence of women's categories was in part a reaction to the government's campaign to encourage frugality and its crackdown on corruption. The report noted how this had hit the practice of giving gifts with luxury watches and men's categories being particularly affected.
Womenswear and shoes showed strong momentum, however, with growth rates for the year ranging from 8% to 10%.
"China's luxury market has quickly changed from land-grab to a steady focus on consumer experience and 'like for like' sales," said Bruno Lannes, a Bain partner in China and lead author of the Chinese edition of the study.
"The mind-set among global brands here is changing from men's categories and accessories to women's categories and fashion. Brands are preparing for this major shift," he added.
The extent of that shift is evident in women's share of luxury spending, which has grown from just 10% in 1995 to 50% in 2013.
Global brands have slowed the number of store openings in order to focus instead on 'renovation, relocation and operational improvement for domestic shoppers'.
And with 73% of consumers going online to get information about luxury goods before they buy, marketing and sales channels are having to adapt as well.
Bain also observed a market that was becoming increasingly polarised. For example, 25% of luxury handbags cost less than 5,000 yuan ($826), while 33% were priced at more than 20,000 yuan.
Data sourced from China Daily; additional content by Warc staff