China’s luxury market is showing signs of recovery, with sales gradually approaching the levels seen in 2021. Industry analysts and financial reports from major luxury brands indicate emerging growth opportunities differing from pre-pandemic trends. LVMH, a prominent player in the luxury sector, reported its 2023 results, highlighting a significant increase in fashion and leather goods sales in China, which rose by over 30% in December. Bernard Arnault, the chairman and CEO of LVMH, mentioned on an earnings call that the number of Chinese customers had doubled compared to 2019, signifying a substantial growth in domestic luxury purchases in China.
Consulting firm Bain & Company noted that the mainland China personal luxury market grew by approximately 12% last year, reaching over 400 billion yuan ($56.43 billion). While this figure is yet to surpass the 2021 levels, partly due to the resumption of some overseas luxury shopping, Bain anticipates continual growth in China’s domestic luxury market. Luxury purchases in mainland China, which comprised about 16% of the global market last year, are expected to reach at least 20% by 2030, according to Weiwei Xing, a partner at Bain’s consumer products and retail practices in Greater China. Richemont, the parent company of Cartier, also reported growth in sales within mainland China, Hong Kong, and Macao, marking a 25% increase in the quarter ending December 31. Burkhart Grund, the company’s CFO, described the Chinese business as “rebuilding,” especially in light of the ongoing real estate slump and slow recovery of overseas tourism by Chinese shoppers.
In recent years, Chinese consumers have shown caution in spending due to uncertainties about future income and overall economic growth slowdown. Luxury brands have increasingly utilized online channels for customer engagement, with successful companies in 2023 focusing on selling luxury goods perceived as investible and iconic. The Bain report also highlighted the recovery of approximately half the leading brands and several niche brands to 2021 sales levels. An emerging segment in the Chinese consumer market is high-end bedding and fine linens. According to PitchBook data, there have been at least four investment deals in this category over the last 18 months, including the acquisition of Italian luxury bedding company Frette.
Ashley Dudarenok, founder of ChoZan, a China marketing consultancy, observed that consumer attitudes toward bedding products are evolving, with an increasing emphasis on quality, functionality, and additional services. Although the U.S. accounts for a significant portion of the global market for high-end bed and bath textiles, Chinese consumers currently represent about 5% or less. Research by the Beijing-based consumer research institute of ZWC Partners suggests that the Chinese luxury and affordable luxury segment of the bed, bath, and textile market was valued at approximately $700 million in 2023, a small yet growing part of a domestic bedding market worth about $10 billion.
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