Chinese luxury spend up 20% in 2018 but expect a slowdown this year

That’s according to the latest Bain & Co annual China luxury study, which said that Chinese consumers were key to the global sector last year, and are set to remain so, even though their shopping habits are evolving.In 2018, the luxury sector in China grew at 20%, matching the previous year’s growth. Behind that was a story of mixed performances as some brands grew by 25%+, while for every brand enjoying such explosive growth, two more managed to grow by less than 10%. That may nonetheless seem impressive compared to some other markets, but is still weak given the market’s overall expansion and the massive investment required in the countryคำพูดจาก สล็อตเว็บตรง. The strongest growth was seen online last year, up 27%. 

Overall Chinese luxury, as mentioned, made up a third of the global total last year when spending abroad is taken into account. In 2010 it had been 19% and in 2017 it was 23%. But spending abroad could take a hit in the future with Bain saying luxe spending by Chinese consumers at home will account for around half of the Chinese total by 2025, compared to 27% in 2018.THE KEY CONSUMERSThe report said that in order to guarantee success in a market that has seen an economic slowdown, brands need to be able to reach Millennial consumers. “Millennials will continue to be the main driver of the growth of this market in the future, as the average age of luxury consumers is much younger in China than anywhere else in the world … and they value newness more than discounts,” said Bruno Lannes, a Shanghai-based Bain partner and co-author of the report.And while the traditional view is that this consumer buys only the most ultra-luxe labels, Lannes added that “this demographic might not always buy the most expensive items, but they shop frequently. That’s why it’s important to have new collections and apply the fast-fashion playbook.”Bain also said that brands need to resonate with a fast-expanding middle class as such consumers will make up 65% of all Chinese households by 2027. They must have strong digital operations too, and of course, must reach the Chinese luxury shopper within China, rather than assuming that she or he will spend most when abroad.The report (which focused on urban consumers) said most of the luxury sector’s growth last year came from the Millennial demographicคำพูดจาก สล็อตเว็บตรง. Bruno Lannes said Chinese Millennials are digitally-focused and know a lot about brands. If a brand doesn’t resonate with them, it’s going to be hard for it to succeed in the country.He also said that those brands that have done well, have merged the key casual/street/sports trends with luxury in a way that has made an impact. Products such as Balenciaga’s Triple S trainer and the Louis Vuitton/Supreme collaboration both did well in the country. And Gucci’s deft combination of youth-focused product with more conservative items to appeal to older consumers has also helped it succeed both in China and elsewhere.While price isn’t the key issue for Chinese luxury shoppers, especially, Millennials, Bain also said that another reason for luxury growth there has been import duty reductions and harmonisation of prices so that domestic Chinese prices are on a par with those abroad. Stricter control of the ‘grey’ market has also helped.THE FUTUREBain said that brands need to think about raising their investment in China with more product focused on local tastes, more stores, and additional marketing spend. 

But although stores are key, digital will also require plenty of investment given the digital obsession of the local consumer. Those labels that have succeeded so far have had a strong digital element and the report said it’s crucial to make an impact on Tencent’s WeChat. Brands are already shifting most of their digital marketing spend to WeChat.Yet even though digital is hugely important and sales rose 27% last year to make up 10% of the total sector, fashion labels still aren’t making the most of it. Much of 2018’s digital growth was due to cosmetics with women driving that spend, helping the category become the fastest growing luxury product segment of all with 2018 growth of 25%.And digital should take on more importance as overall luxury growth slows. As mentioned, Bain is predicting much slower luxury spending growth by Chinese consumers this year. “We need to realise that China’s economy is slowing down,” Lannes said. “In particular, Chinese consumers are looking at their savings and asset values before making decisions to buy luxury items.”

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