Luxury market to continue growth
Print Edition
CHINA’S luxury market is expected to grow by low double digits in 2018 after posting the highest expansion in the past five years in 2017, with market momentum still vibrant.
Bain & Co said in its 2017 China Luxury Report yesterday that new consumers — those aged between 20 and 34 — were major contributors to the luxury market’s growth last year.
Chinese spending in the domestic luxury market grew 20 percent to 142 billion yuan (US$22 billion) last year, outpacing purchases overseas.
Luxury spending from China contributed to 32 percent of the global luxury market over the past year, with renewed consumer confidence and narrowing price gaps for luxury goods between overseas and domestic markets contributing to the spending boom.
Compared with mature consumers, millennials start purchasing luxury goods at an earlier age and buy more frequently. They purchased an average of eight times last year, compared with five times for other buyers.
Cosmetics, women’s wear and jewelry were the top categories, and sales of them surged over 20 percent annually, surpassing the growth of other categories.
“In response to the booming appetite of millennials, we’re seeing luxury brands repositioning themselves to better reach this influential demographic group, particularly through digital media that we know plays an influential role in shaping younger consumers’ opinions about luxury and fashion,” said Bruno Lannes, partner at Bain’s China office and author of the report.
Although they saw a high growth rate, online channels only contributed to 9 percent of overall sales. That’s expected to continue to pick up in the future, with more brands planning to open their proprietary websites.
The report said creating “newness” and offering innovative ideas will be important if brands hope to capture the new generation of consumers.
Brands should also consider partnering with fashion icons and keep a “trendy” image, the report said, to cater to the individualism of millennials.
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