Luxury sales continue to rebound in China

Luxury sales on the Chinese mainland returned to the growth trajectory by recording a 12 percent sales increase in the past year after suffering losses in 2022, according to an industry report.

A mid-single-digit annual growth is expected for the coming year, and China remains a leading market in the global luxury landscape, said Bain & Company's latest China Luxury Report.

The domestic luxury market started with a robust rebound in the first half of last year due to the low base in the second quarter a year ago, while weaker growth was witnessed in the second half, and the overall performance did not fully recover to 2021 levels, it said.

At the same time, the recovery of Chinese tourists' luxury spending in Europe and Asia has been significant.

Chinese luxury consumption contributed around 22 percent to 24 percent of the world's total last year, and is still on track to reach 35 percent to 40 percent of the world's total.

Spending on the Chinese mainland set to make up 24 percent to 26 percent of the total spending, solidifying its position as one of the leading luxury markets globally.

"As the market transitions to a post-COVID growth phase, uncertainties remain regarding the speed at which consumer confidence will resume and how overseas luxury shopping will evolve," said Bruno Lannes, a Shanghai-based senior partner at Bain & Co.

Xing Weiwei, a Hong Kong-based partner at Bain & Company agreed.

"Brands with long-standing iconic products have performed better than those that mostly rely on seasonal offerings," she said.

She expected a slowdown in store expansion for physical stores, and said brands would instead focus on more sophisticated customer operations and enhance their operations efficiency.

All categories fared well last year, and fashion and lifestyle and jewelry led the strong recovery with growth rates from 15 percent to 20 percent.

Momentum in fragrances and makeup also drove up beauty category sales by around eight percent, while sales of leather goods grew at 10 to 15 percent as consumers focused more on the lower-price bag segment.