Luxury brands accelerate their China market presence

At the beginning of 2023, luxury brands significantly accelerated their presence in China.

According to Bain & Company, luxury goods sales in China will grow by 36% in 2021 and 21% in 2022.

Bernstein, a luxury consultancy, forecasts that Chinese luxury demand is expected to rebound to 25%-35% in 2023, with Western market demand growing at 5%-10%.

The resilience of the Chinese market results from luxury brands' continuous education and investment in Chinese consumers over the years, making it an irreplaceable large market.

Increasing consumer acceptance and awareness of brands means that it is easier to achieve returns through marketing.

In the past three years, to attract Chinese consumers who are unable to leave the country that luxury brands have tried every possible way to hold various shows, increase retail innovation, and try new formats such as coffee and restaurants, such as Prada Wu Zhong Market, LV restaurant, Tiffany restaurant, etc., indicating the mentality of playing into the young circle. These attempts have brought the distance between the brand and consumers.

Savills: China has the highest number of luxury brands opening stores in 2021, with nearly 55% of new stores in China. At present, Gucci has a maximum of 87 stores in China, LV has 62, Dior has 60, Prada has 42, Hermes has 25, and Chanel has 16, so the move of the top luxury camp often means the direction of the wind.

LV has announced that it will try to open a store in every provincial capital in China by 2025.

The 40 to 50-year-olds are the core of high-net-worth consumers and have moved past conspicuous consumption to the status marker and investment consumption stage, mainly concentrated in first-tier cities.

Bain expects Chinese consumers' luxury consumption to recover soon and reach 150-1800 billion euros by 2025

According to Savills, the luxury market in China's second-tier cities generally outperforms that of first-tier cities, and luxury brands are beginning to expand into lower-tier markets.

Compared with North, Guangzhou, and Shenzhen, non-Tier one cities where brand awareness has yet to take shape have great potential for development. For example, Chengdu, Chongqing, and Kunming in the southwest, Wuhan, Changsha, and Zhengzhou in the central part, Wuxi and Qingdao in the east, and Hainan, a new duty-free destination.

Cross-border travel has resumed, but consumers have cultivated Benesse consumption habits.

Luxury goods continue to be bullish on China's market logic, and luxury goods' development logic is consistent. Market resilience is more important than the growth rate.