China’s luxury market is experiencing a resurgence, with new growth opportunities emerging compared to pre-pandemic trends. Despite not yet reaching the levels of 2021, the rebound in luxury sales is evident, and industry analysts, as well as financial reports from major brands, forecast continued growth.
Luxury Sales Rebounding in China
LVMH, a prominent luxury giant, recently unveiled its 2023 results, revealing a growth of over 30% in fashion and leather goods sales in China in December. This spike in domestic sales indicates a shift in the purchasing behavior of Chinese consumers, with more opting to buy luxury products within the country. The mainland China personal luxury market grew by approximately 12% last year, surpassing 400 billion yuan ($56.43 billion), signifying a noteworthy recovery.
Growing Importance of the Chinese Market
Luxury purchases in mainland China constituted about 16% of the global market in 2023, with expectations to reach at least 20% by 2030, highlighting the increasing significance of the Chinese luxury consumer. Richemont, the parent company of Cartier, reported a 25% growth in sales in mainland China, Hong Kong, and Macao, indicating a positive trajectory for the luxury market in these regions.
Consumer Behavior and Market Resilience
The prolonged real estate slump and the slow recovery of overseas tourism have prompted a rebuilding phase for the Chinese luxury market, despite consumer reluctance to spend in the recent years due to economic uncertainties. To adapt to changing consumer dynamics, luxury brands have shifted towards online channels to ensure customer engagement, with a focus on selling iconic luxury goods deemed investible.
Niche Brands and Emerging Segments
The Bain report suggests that approximately half of the leading brands and several niche brands have rebounded to 2021 sales levels, with niche brands that have invested in building brand desirability experiencing particular success. Additionally, the bedding and fine linen segment has emerged as an unexpected yet promising area within the luxury market, with a growing emphasis on high-quality bedding and a shift in consumer attitudes towards these products.
The Untapped Potential of the Bedding Market
Despite the potential, the high-end bedding market in China remains relatively untapped. Domestic home textile brands are actively pursuing technological innovations and exploring the high-end bedding market to meet changing consumer demands. On the global scale, Chinese consumers currently account for only about 5% or less of the high-end bed and bath textiles market, signifying significant room for growth and expansion.
China’s luxury market is witnessing a remarkable resurgence, with domestic sales indicating a shift in consumer behavior and preferences. The growing importance of the Chinese market, coupled with the emergence of niche brands and untapped segments like high-end bedding, presents new frontiers and opportunities for luxury brands to thrive and expand their presence in the region. As the Chinese luxury market continues to evolve, brands will need to adapt and innovate to meet the changing demands and preferences of the discerning Chinese consumer.