China’s luxury market suffers from spending crunch amidst strict COVID measures
Despite this, consumer appetite remains strong.
China’s luxury market showed strong momentum from the celebration of Chinese New Year up to March, but its growth was dragged by strict policy restrictions that forced consumers to tighten their belts.
“The country’s spending has been challenged by its strict COVID restrictions, which proved much more significant than its 2020 policies,” Bain & Compay said in its Luxury 2022 Spring Update - “Rerouting the Future.”
“Yet, local consumer appetite remains strong and will potentially lead the country to recover between in late 2022 to early 2023.”
Due to the slower recovery of China’s luxury market as well as the spending crunch in mature markets, Bain & Company expects a slower-paced recovery for the luxury market.
In 2022, the report estimated that the market growth will reach between €305-320b by the end-2022, reflecting a growth of 5-10%.
In an earlier report, Bain & Company noted that Chinese consumers are likely to be the top clients for luxury goods in 2025.
Moreover, the Luxury 2022 Spring Update found that globally, the personal luxury goods market saw a v-shaped rebound after it reached €288b in value in 2021, largely driven by the holiday shopping season which rose 7% compared to pre-pandemic levels.
In the first quarter of 2022, the personal luxury goods market also showed a “remarkable” performance after it grew 17-19% at current exchange rates.
Europe and the US both saw strong growth, whilst luxury brands in South Korea also showed a “profound transformation."
“The country has increased its size and cultural relevance, replacing touristic spending with local demand,” the report read in part.
“Winning brands successfully reinvented their business model in the country to cater to growing local demand and influence.”