Chinese consumers’ role in the future of global luxury | WARC | The Feed

Chinese consumers’ role in the future of global luxury

China’s domestic luxury sector has grown during the pandemic, thanks to a combination of factors that may bring about long-term changes to the sector along with potential global repercussions.

Why it matters

During the pandemic, overseas spending by Chinese tourists on luxury items has been redirected into the domestic market, where online sales have also increased significantly. As western markets slowly reopen, brands have some big decisions to make on where they allocate their corporate spend and what the balance should be between the online and physical experience.

The details

• Sales of luxury goods in China were up 48% in 2020 to $53.5 billion, according to a report by Bain & Company and Tmall.com.
• Luxury businesses, such as LVMH, L’Oréal and Ralph Lauren highlighted China as the market powering their growth over the last quarter of 2020 and into 2021.
• Despite domestic growth, however, overall luxury spending by Chinese consumers was still down 35% last year due to travel restrictions.
• Luxury online penetration in China has risen from 13% in 2019 to 23% in 2020; much of this growth was driven by livestreaming.
• Domestic demand for luxury has also been driven by the transformation of southern China’s Hainan Island, which has seen big investment from Beijing, and has boomed as a tax-free spending hub.

Soundbite

“Brands that were able to offer an attractive value proposition of price balanced with a unique China boutique experience may be able to ultimately convince Chinese consumers to spend domestically, which can have an effect on global corporate allocation [of spending]” – Angelito Perez Tan, CEO of RTG Group Asia.

Sourced from WWD, Financial Times