China’s luxury goods market is set for this year after covid-related lockdowns ended a five-year expansion in 2022, Bain said.
“Covid-related closures starting in the current quarter created barriers to purchase” last year, the consultancy said in a press release. of non-public luxury goods in China up 10 percent year-on-year in 2022, he estimated.
By 2023, “China’s customer basics remain intact,” Bain said. “Compared to other emerging markets, China is a giant for luxury growth. It has more middle- and high-income customers, and those populations are expected to double by 2030. ” the press said.
Shares of luxury heavyweights such as LVMH, Hermès, Kering, Tiffany and Prada gained on hopes of a recovery in the Chinese sector after the end of the country’s “zero-Covid” policies in the fourth quarter of last year.
“Luxury intake will decrease as Covid decreases, traffic in malls improves, and customer confidence recovers. We expect to see 2021 sales levels between the first and second parts of 2023,” said Weiwei Xing, a Hong Kong-based wife of Bain.
“While optimism abounds, there are also risks,” Xing said. “As more wealthy Chinese live outside of China, luxury brands want to offer wonderful reports around the world. “
The economic downturn hit consumers of entry-level luxury goods more than high-net-worth Americans last year, Bain said. The fashion and lifestyle categories saw a 15 percent to 20 percent decline, he said.
Product categories with higher online penetration were less affected by the shutdowns and held up better, Bain said. For example, with 50% online penetration, luxury appearance decreased by 6%, he said.
“Big brands outperformed small players on average” in China’s luxury goods market last year, Array. Bruno Lannes, senior spouse of Bain in Shanghai.
“While most brands experienced declines in 2022, some remained solid or grew despite challenging conditions. Three points contributed to its success: first, giant brands outperformed small players on average; second, brands with iconic portfolios performed better than those providing fashion or seasonal products, and finally, brands with a higher concentration of very large consumers performed better,” said Bruno Lannes, senior partner at Shanghai-based Bain.
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