Sales of luxury items in China jumped in 2021, with purchases of jewelry rising 35% as consumers continued to spend locally amid border closures, according to Bain & Company.
However, that growth was slower than the 70% to 80% increase in 2020, Bain noted [Thursday January 20] in its China Luxury Report. Leather goods was the fastest-growing category, up 60%, followed by a 40% surge in fashion and lifestyle spending. Sales of high-end watches grew about 30%.
Several factors drove the increase in luxury, including pandemic-related travel restrictions, which prevented customers from spending money in Hong Kong and other tourist cities and prompted them to make purchases domestically instead. The expansion of the duty-free retail sector in China’s Hainan province also contributed to the rise. However, the existence of this market in Hainan and similar operations could hurt luxury brands by making their merchandise appear less expensive, Bain cautioned.
Overall spending on luxury goods on the mainland climbed 36% to CNY 471 billion ($74.26 billion), compared with a 48% increase in 2020.
The slowdown in the pace of growth reflects a comparison with 2020’s post-lockdown rebound: Shoppers returned in larger numbers during the second half of that year as restrictions began to ease. Sporadic outbreaks of Covid-19 also deterred spending in 2021, as did new regulations in the influencer scene, which led to reduced marketing spending across many luxury brands, Bain noted.
China’s share of the global luxury market advanced to 21% in 2021, versus 20% the year before, putting the country on track to become the world’s largest luxury goods market by 2025. This growth is likely to continue, even if the pandemic situation improves such that Chinese consumers are able to visit overseas retail destinations, Bain explained.
Photo © Chow Tai Fook.