China sees concentration of luxury buyers | WARC | The Feed
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China sees concentration of luxury buyers
China’s entry-level luxury consumers are unlikely to be drawn into a spending spree as the economy begins to pick up after the easing of Covid restrictions, according to a new report from Bain & Company.
Why it matters
Globally, Bain reports that the top 2% of customers account for about 40% of luxury sales and that pattern is broadly replicated in China, where the consultancy also observes a growing concentration of such VICs (Very Important Customers). These people buy more frequently online and off.
Luxury marketers are likely to find themselves targeting a significantly smaller audience than was the case pre-pandemic, with greater focus on high-net-worth individuals and less on middle-class purchasers who will be more cautious in their spending.
Luxury spending declined in 2022 – 10% across the sector – but some categories were worse hit than others. Those with strong online penetration were less affected: luxury beauty, for example, has an online penetration of 50% and contracted just 6%.
- When in-store shopping became possible again, luxury customers weren’t browsing but completing short, targeted shopping trips.
- Bigger and iconic brands typically outperformed smaller and trends-focused ones.
- The resumption of travel will boost the domestic market initially, where duty-free shopping in Hainan had become important pre-Covid. As international travel picks up, luxury brands may need to rethink their global pricing strategies.
Sourced from Bain & Company
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