The global luxury industry is worried as Chinese consumers look inward when it comes to buying luxury goods
China’s big consumers have returned to shopping. But in the time of Kovid, they prefer to shop at home instead of going to other countries.
According to a Bloomberg report, 62% of luxury spending by Chinese consumers in April was done within their borders, rising from 41% in the same month in 2019. Those are sales figures compiled by alternative data provider Sandalwood Advisors.
Although Chinese tourists are slowly traveling abroad again, analysts polled by Bloomberg say the share of their overseas purchases will not return to their heyday. Domestic luxury offerings have grown in sophistication and range, while rising prices for goods around the world are hindering Chinese shoppers’ enthusiasm to leave home, a Bloomberg report said.
China was the world’s fastest-growing source of tourists before Covid, with most of their luxury spending, around 70%, happening outside the mainland in 2019. Bloomberg report.
“A significant portion of consumption power will remain in the domestic market because of ease and convenience,” said Prudence Lai, senior analyst at market research provider Euromonitor International. Retail markets in Asian destinations popular with Chinese shoppers “will see a flatter recovery trajectory and take longer to return to pre-Covid levels than other travel industries,” he said, and “will continue to seek alternative source markets and engage with their customers.” should consider diversifying the “basis for growth”, according to a Bloomberg report.
“The local market inside mainland China now represents more than 50% of total Chinese spending,” said Jonathan Siboney, founder and CEO of LuxuryKnight, a Paris-based data intelligence firm.
With the increase in spending at home, some luxury brands are focusing on investing in this sector. For example, LVMH, the world’s top luxury conglomerate, is shifting resources out of Hong Kong and focusing more investments in mainland cities including Shanghai and Shenzhen, Bloomberg reported last month.
“Going forward, we expect there will be a higher mix of local spending compared to pre-Covid,” said Agnes Xu, co-founder and head of research at Sandalwood, as part of store expansion across the country and in Hainan. is now more accessible in mainland China. ,