Luxury brands are once again turning their gaze towards the lucrative market in China, according to Tiffany & Co CEO Alessandro Bogliolo in a recent interview. The luxury sector in China has experienced its fair share of challenges in recent years, from government crackdowns on extravagant gift-giving to currency fluctuations. However, with a weaker yuan and the ongoing trade tensions between the US and China, the Chinese high-end consumer market is witnessing a resurgence.
In 2012, President Xi Jinping launched an anti-corruption campaign that had a profound impact on luxury spending in China, leading to a decline in ostentatious displays of wealth among officials and business elites. This period of austerity was felt across the luxury sector. Despite this, Tiffany & Co reported an impressive sales growth of over 25 percent in mainland China during the second quarter of this year, a stark contrast to the company’s three percent global sales decrease during the same period.
Bogliolo credits the robust growth in China to a combination of factors, including currency trends and the Chinese government’s initiatives to stimulate domestic consumption. The devaluation of the yuan against the US dollar, coupled with uncertainties surrounding the trade war, has deterred Chinese consumers from spending on luxury goods abroad. Furthermore, the unrest in Hong Kong has redirected luxury spending within mainland China, benefiting local sellers.
The shift in the Chinese luxury consumer profile has also shaped the market landscape. The era of conspicuous consumption targeted by the anti-corruption campaign has waned, giving rise to a new generation of discerning consumers who prioritize craftsmanship, subtlety, and individuality over opulence. Luxury brands are responding to this changing clientele by diversifying their product offerings, enhancing online shopping experiences, and ramping up marketing efforts in China.
Tiffany & Co exemplifies this adaptation by investing heavily in the Chinese market. With 35 stores in mainland China, the brand plans to expand its physical presence, launch e-commerce platforms, and introduce fresh, contemporary designs to cater to a younger audience. The evolving luxury market in China is pivoting towards inclusivity, authenticity, and self-expression, challenging traditional notions of exclusivity.
As Bogliolo points out, “Luxury is an expression of society and culture,” emphasizing the ongoing evolution in consumer preferences. In this dynamic landscape, luxury brands must align with the values and aspirations of modern Chinese consumers to thrive in the competitive market. The future of luxury in China hinges on brands’ ability to connect with millennials and Gen Z through meaningful, culturally relevant narratives and products.
For more information on the luxury market in China, check out these relevant resources:
1. Forbes – The Impact of COVID and Trade Tensions on Luxury Brands in China
2. Business of Fashion – China’s New Generation of Luxury Consumers
