Luxury bags have always come with a hefty price tag, but it seems that they are even more expensive in China compared to Europe. Despite a decline in China’s demand for luxury goods in 2022, the country remains an important market for the high-end industry. While wealthy Chinese consumers may not be traveling to Europe or the US as frequently as before, they have resumed domestic travel due to the slowdown in anti-Covid measures. This has prompted fashion labels to shift their focus to the rebound in domestic demand and adjust their prices accordingly.
A recent study conducted by data analysis specialist Retviews by Lectra sheds light on the price differences between luxury bags in different markets. Stronger US dollar rates have attracted American tourists to luxury shops in major European cities, where they can take advantage of more favorable prices. With the Chinese yuan currently trading at a low rate compared to the euro, it is expected that Chinese shoppers in Europe will also increase.
However, luxury brands have not yet standardized their prices across different markets. In fact, many of them have implemented their highest price increases in China. Despite a 10% decline in luxury goods sales in the country last year, analysts from Bernstein predict a significant rise of 25% to 35% in sales this year. Chinese consumers are once again showing a strong interest in luxury products and are benefiting from savings accumulated during the “zero Covid” period.
Retviews’ study reveals that luxury brands offer consistently lower pricing in Japan compared to China. Louis Vuitton has the highest price difference at -50% compared to Gucci (-14%), Celine (-6%), and Bottega Veneta (-8%). However, China still remains the most expensive Asian market for leather goods, especially for the highly sought-after “it bags” made in Europe that are synonymous with craftsmanship. The United States is also a market where leather goods are expected to see growth in the coming years.
Significant price differences exist for luxury bags in Europe, the UK, the US, and China. For example, the price of the Celine Triomphe canvas tote bag is significantly lower in France compared to the US and China. Chinese consumers pay 40% more for this bag compared to their French counterparts. The iconic “Cabat” braided bag from Bottega Veneta is 42% more expensive in China, while the popular Neverfull from Louis Vuitton costs 30% more, and Gucci’s Ophidia tote is 20% more expensive.
One bag that has seen a substantial price increase is Gucci’s Horsebit 1955 model. Originally priced around $400, it has more than tripled in price, reaching $2,725 to date. This bag is marketed in China for 30% more than in Europe, and it has shown significant year-on-year increases in both markets.
In the past, wealthy Chinese tourists were drawn to Europe not only because of lower prices but also due to the wider range of luxury goods available, especially in terms of more creative fashion products. However, this is no longer the case. Luxury brands are expanding their offerings in China, particularly during Chinese New Year, which has become a key sales period for luxury goods. Brands are capitalizing on Chinese astrology, for example, by celebrating the year of the rabbit in 2023.
Luxury brands like Gucci and Louis Vuitton have significantly increased their investments in China. They have expanded their range of leather goods, surpassing what is available in France. Gucci, for instance, has nearly tripled the number of leather goods it offers in China, while Louis Vuitton has 19% more compared to France.
The luxury bag market in China continues to be highly profitable, with brands adjusting their strategies and prices to cater to domestic demand. While prices may be higher compared to Europe, Chinese consumers are willing to pay a premium for luxury goods, and brands are taking advantage of this opportunity. As the luxury market in China continues to grow, it is expected that prices will remain high as brands continue to invest and expand their offerings in the country.
Useful links:
1. Reuters: Luxury bags find fewer Chinese buyers despite China rebound
2. Jing Daily: How Luxury Brands are Localizing Chinese New Year Campaigns
