China’s luxury market is making a comeback and showing impressive growth. Even though it has not yet reached the levels of 2021, it’s making significant strides compared to pre-pandemic trends. The latest results from LVMH for 2023 indicated that the company’s fashion and leather goods saw growth of over 30% in China in December, signaling a positive trend in the luxury market.
The surge in sales showed that Chinese consumers are increasingly purchasing luxury products locally, particularly due to the resumption of overseas travel. Bernard Arnault, the chairman and CEO of LVMH, mentioned that there are now twice as many Chinese customers in stores compared to 2019, indicating a substantial increase in domestic purchases.
Bain & Company reported that the mainland China personal luxury market grew by about 12% last year to more than 400 billion yuan ($56.43 billion). The firm also expects the domestic luxury market to continue growing in the years to come, with luxury purchases in mainland China accounting for about 16% of the global market.
Richemont, the parent company of Cartier, also experienced a 25% increase in sales in mainland China, Hong Kong, and Macao in the last quarter of 2023. This growth is significant, especially considering the slow recovery of overseas tourism and the prolonged real estate slump.
The economy is gradually healing, with some consumers still being hesitant to spend due to uncertainties about future income and economic growth. However, luxury brands have adapted by increasing their online presence to engage with customers and offering products that have a lasting appeal.
In addition to well-established brands, niche brands are also showing promising growth. Companies that have consistently invested in building brand desirability over the years have experienced success. One surprising emerging segment is that of bedding and fine linen, with Chinese consumers showing a growing interest in high-quality bedding products.
Investment deals in this category have been on the rise, indicating an untapped market with significant growth potential. Chinese home textile brands are actively pursuing technological innovations and exploring the high-end bedding market to meet consumer demands.
Despite growth, the Chinese luxury market for bed and bath textiles remains relatively untapped. As of 2023, Chinese consumers only account for less than 5% of the global market, presenting a massive opportunity for growth in the future.
All these developments point to the importance of the Chinese luxury consumer and the domestic market overall. With the right strategies and adaptations, luxury brands are well-positioned to capitalize on the growing affluent consumer segment in China.
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