According to the latest Bain & Co annual China luxury study, Chinese luxury spending saw a remarkable 20% increase in 2018. This surge in spending by Chinese consumers has made them accountable for a third of all luxury spending globally. However, experts predict that in 2019, the trend of Chinese consumers spending more on luxury items within the country rather than abroad is likely to persist.
Despite the impressive growth in 2018, economic challenges in China may lead to a slowdown in luxury spending this year. Projections suggest that growth rates could dip to around 10%, compared to the 20% growth seen the previous year.
The study highlights the pivotal role that Chinese consumers play in the luxury sector. In 2018, the luxury market in China saw a 20% growth rate, with some brands experiencing even higher growth rates of over 25%. It was observed that online luxury sales recorded the most noteworthy growth at 27%.
While Chinese luxury spending abroad increased dramatically over the years, accounting for a third of the global total in 2018, the trend is expected to shift towards domestic luxury spending. By 2025, it is predicted that half of all luxury spending in China will be done domestically.
To navigate the economic slowdown, brands are advised to target the Millennial demographic, who are projected to be key drivers of growth in the luxury sector. Chinese Millennials place a high value on new experiences and collections, necessitating brands to adopt a fast-fashion approach. Additionally, focusing on the middle class in China and enhancing digital operations are crucial strategies for brand success in the luxury market.
Brands that successfully blend casual, street, and sports trends with luxury products have witnessed significant success in China. To capitalize on the evolving market, brands are encouraged to invest in local products, expand stores, and intensify marketing efforts. Leveraging digital platforms like Tencent’s WeChat for marketing strategies is also emphasized to effectively reach the Chinese luxury shopper.
While digital sales in the luxury sector increased by 27% in 2018, there is still untapped potential for fashion labels to maximize this opportunity. Cosmetic products have shown substantial growth, driven by women, making it the fastest-growing luxury category in 2018.
In conclusion, as the pace of luxury spending growth in China slows down, brands must adapt to changing consumer behavior by focusing on local investments, digital marketing, and catering to the preferences of Millennials. Embracing these strategies will be vital for brands to thrive in the evolving luxury market in China.
For further insights into China’s luxury market, you can visit Jing Daily and Vogue Business.
