Luxury market to continue growth after stellar 2017

China's luxury market is expected to see low double digit growth in 2018 after recording the highest annual growth of the past five years in 2017, with market momentum still vibrant.

According to the 2017 China Luxury Report released today, Bain & Company found that new consumers — particularly those aged between 20 and 34 — were major contributors to the luxury market's growth last year. 

Chinese spending on luxury personal goods rebounded and recorded strong growth last year, with the domestic luxury market outgrowing overseas purchases at an annual pace of 20 percent, to 142 billion yuan (US$21 billion).

Luxury spending from China contributed to 32 percent of the global luxury market over the past year, with renewed consumer confidence and narrowing price gaps for luxury goods in overseas and domestic markets also contributing to the spending boom.

Compared to mature consumers, millennials start purchasing luxury goods at an earlier age and buy more frequently. They purchased an average of eight times in the past year compared with five times for other buyers.

Cosmetics, women’s wear, and jewellery are the top categories, and they're all seeing more than 20 percent annual sales increases, surpassing the growth of other categories.

“In response to the booming appetite of millennials, we’re seeing luxury brands repositioning themselves to better reach this influential demographic group, particularly through digital media that we know plays an influential role in shaping younger consumers’ opinions about luxury and fashion," said Bruno Lannes, partner in Bain's China office and author of the report.

Although they witnessed a high growth rate, online channels only contribute to about 9 percent of overall sales. That's expected to continue to pick up in the future, with more brands planning to open their proprietary websites.

The report suggest that brands hoping to capture the new generation of consumers, creating "newness" and offering innovative ideas will be more and more important. 

Brands should also consider partnering with fashion icons and keep a "trendy" image, the report added, in order to cater to the individualism of millennials.