It takes more than a coronavirus pandemic to suppress the demand for luxury goods in China. Figures from Bain & Company show despite mounting global social and economic challenges, China’s luxury goods market finished another year with double-digit growth, with some brands exceeding a 70 percent increase.
In 2021 the sales of luxury reached 471 billion yuan (74.3 billion dollars), up 36 percent after the first surge of 48 percent in 2020, Bain reported. A value that almost doubled over a period two years during the pandemic crisis, due to the restrictions on international travel.
Globally, China’s share of the luxury market has increased from around 20 percent in 2020 to around 21 percent in 2021, according to Bruno Lannes, partner of Bain & Company and co-author of the report. “We expect this growth to continue putting the country on track to become the largest luxury goods market in the world by 2025,” said the analyst.
Growth varied across categories
Growth varied significantly across brands (ranging from 10 percent to more than 70 percent) and categories. Leather goods was the fastest growing category, at about a 60 percent growth rate, followed by fashion and lifestyle, at about 40 percent. Jewellery spending increases were lower than in 2020, but still managed a growth of about 35 percent, while high-end watch purchases rose about 30 percent. Luxury beauty spending increased about 20 percent, the report stated.
The report iterates growth in 2021 did not follow a steady incline. Rather, all categories saw strong YOY increases (40 percent – 100 percent) in the first half of the year, while growth throughout the second half of 2021 dipped to an estimated 0 percent –25 percent YOY, according to evidence gathered from a representative sample of brands.
According to the Boston-based Bain, the drivers of the acceleration include the duty-free boom in Hainan, also driven by the decline in travel and displacement, and the increase in digitalisation, with online sales increasing 56 percent. All factors show no sign of slowing down in the near future and will contribute to shaping the post-pandemic luxury sector.
The luxury fashion and lifestyle category grew online nearly 80 percent YTD as of November, yet online penetration reached only about 10 percent. Bain predicts brands should anticipate the progressive reopening of international travel, with implications on pricing harmonization across geographies. In the short term, it expects 2022 will produce low double-digit growth for personal luxury overall.Article source: Bain & Company report: A Year of Contrasts for China’s Growing Personal Luxury Market