Luxury

China’s luxury sales rose 36% in 2021, but slowed down from 2020

While sales will likely further decelerate this year, three emerging trends will drive growth.
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Francis Scialabba

· less than 3 min read

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China’s luxury goods market saw another solid year in 2021, as travel restrictions kept consumers shopping domestically, and online sales and duty-free shopping surged.

Luxury sales in the country rose 36% to 471 billion yuan (~$74.3 billion) in 2021, doubling domestic sales over 2019 and growing China’s luxury-goods market share by 1%, per Bain & Company’s China Luxury report released yesterday.

  • Leather goods saw the highest sales jump (~60%), while sales for fashion and lifestyle products rose 40%.

Growing, but slowing: Despite 2021’s jump, sales decelerated from 2020’s 48% sales bump. And, after two years of “extraordinary” growth in the segment, Bain is anticipating 2022 to “produce more moderate growth” for the sector, forecasting a low-double-digit sales increase as the world slowly opens back up.

So, what should luxury brands focus on to eke out $$$? (Especially with the country set to become the biggest luxury market by 2025.) Bain laid out three trends:

Keep it digital: Luxury shoppers have moved online, with e-commerce sales driving more growth (+56%) across all categories compared to brick-and-mortar spending (+30%).

Travel light: Duty-free stores in the island province of Hainan have seen sales jump ~85% YoY. Hainan has served as a “pricing disruptor,” notably influencing shopping habits in China, Bain noted.

  • “As more operators arrive, we expect retail shopping opportunities on the island to continue expanding,” the report said. “With more options for buyers, price competition is likely to become more intense.”

And, and, and: Like in 2020, Chinese consumers are spending more in China—which is expected to continue this year even as international travel gradually resumes.

  • Per BoF and McKinsey’s The State of Fashion 2022 report, 65% of Chinese shoppers’ luxury spend was in mainland China in 2021, up from 2019’s 35%, though it expects a 5% dip in 2022.—EC
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