BEIJING: Big global luxury goods brands are facing an increasingly tough marketing environment in China, with consumers becoming more and more savvy about their high-end purchases.
Several industry experts told Bloomberg that shoppers' spending habits are undergoing a significant shift, affecting luxury spend in the world's most-populous nation.
Figures from market research firm Euromonitor cited by the report suggest that luxury sales in China hit $14.6bn for 2011, making the nation the world's fifth-largest luxury market.
Those brands that got there early, seeking first-mover advantage, could have most to lose, according to HSBC analyst Erwan Rambourg, who said that Vuitton, Omega, and other brands "may start to show signs of suffering brand weariness owing to their early entry into several markets".
The sentiment was echoed by Fflur Roberts, global head of luxury goods research at Euromonitor. The market is starting to mature, she said, "and consumers are becoming more sophisticated about what they buy. It's not just about the bling aspect".
A shift has been noted towards less conspicuous but often more expensive goods. HSBC believes brands such as Prada could benefit. The Italian fashion house uses more leather in its bag collections than rivals such as Louis Vuitton, and relies less on prominent logos to differentiate its products.
In response, some brands have pushed prices higher and launched more exotic products as they seek to edge their image even further upmarket.
Factors behind the changing consumer mindset include the increasing number of Chinese tourists travelling overseas to find that designer clothes and accessories can cost half as much in European and American stores as they do at home.
GDP growth has also slowed slightly, with latest official figures indicating that the economy is expanding at a rate of 7.6% annually.
Data sourced from Bloomberg; additional content by Warc staff