Luxury spending booming
Luxury spending in China will maintain strong growth this year, although dipping to the mid-teens from last year's 20 percent, the latest China Luxury Report from Bain & Company released on Tuesday shows.
This comes against the backdrop of an expected fall in economic growth to slow to 6.2 percent from 6.6 percent last year.
The strongest growth in luxury sales is online — up 27 percent last year from 2017.
Sales of luxury goods hit 170 billion yuan (US$25 billion) last year, following the rebound in 2017 from the downturn that had lasted since 2011.
Chinese shoppers' spending now contribute to one third of the 260 billion euros (US$295.3 billion) global luxury market, picking up from around 19 percent seen in 2010.
Purchases of luxury items in China's mainland would contribute to a half of Chinese shoppers' total luxury spending by 2025, compared to about 27 percent last year, Bain says.
The increase is being fueled by a near-doubling of mainland spending helped by lower import duties, stricter controls on the gray market and shrinking price gaps between the domestic and foreign markets.
Millennials are boosting the luxury market, buying up heavily on sportswear and accessories.
"They are embracing the latest fashion trends and they value the trendy street style, which has been a big boost to the overall luxury market," said Bain & Company Partner Bruno Lannes.
The report also said winning brands are turning to digital channels to enhance their influence among shoppers and are also accelerating product launches, encouraging young consumers to buy more often.
Spending on cosmetics grew more than 25 percent while watches grew less than 10 percent, according to the Bain report, which tracks several hundred personal luxury brands ranging from jewellery to shoes, accessories, leather wear and cosmetics.
Online luxury sales continues to outgrow the overall market, jumping 27 percent from a year ago.
And they now make up 10 percent of luxury spending on the mainland.
"It's still an important complement to offline channels sales," Lannes said.
Digital marketing has boomed as consumers embrace digital services — from shopping to their daily commute.
Online marketing spending now makes up more than half the total marketing budget of luxury brands in China.