China has firmly solidified its position as a dominant force in the luxury market in 2020, as evidenced by a recent report from Bain and Tmall. The report revealed that China’s share of the global luxury market has nearly doubled this year, with the country expected to reach close to CNY346 billion in luxury spending by the end of the year. This surge in luxury sales within China comes as global travel restrictions have limited international luxury spending, leading to a remarkable rebound in domestic luxury consumption.
Despite the overall global luxury market shrinking by 23% in 2020, China’s rise to claim 20% of the market share, up from just 11% in 2019, is a momentous achievement. This rapid growth underscores the growing significance of Chinese consumers to luxury brands worldwide, with their purchasing power driving sales and growth in the luxury sector. Bain and Tmall predict that China will ascend to the top spot in the luxury market by 2025, cementing its position as a key player in the global luxury industry.
Several key factors have contributed to China’s success in the luxury market, including a trend towards repatriation, increased digitalization, and the impact of duty-free stores in Hainan. The pandemic has accelerated the shift towards domestic luxury purchases in China, with categories such as leather goods, jewelry, ready-to-wear, shoes, and high-end watches experiencing significant growth. Millennials and Gen Z consumers, who play a pivotal role in luxury spending in China, are poised to continue driving growth in the foreseeable future.
In terms of e-commerce, China has witnessed a significant increase in luxury online sales this year, with a remarkable surge of 150%. The luxury fashion and lifestyle segment, in particular, has seen a notable increase in online sales, indicating a shift in consumer behavior towards digital platforms. The report suggests that the online shopping habits of Chinese luxury consumers have undergone a permanent transformation, with many planning to increase their share of online luxury shopping in the future.
Sales in duty-free stores on Hainan Island have also played a significant role in China’s luxury market growth, with sales reaching unprecedented levels as the location becomes an attractive shopping destination due to travel restrictions and policy changes. As China’s love for luxury goods remains strong despite the challenges posed by the pandemic, the country is poised to maintain its status as a dominant force in the global luxury market for years to come.
For further reading on China’s luxury market trends, check out these related articles:
1. Forbes – China Luxury Market 2020 Trends
2. CNBC – The Growth of China’s Luxury Market
