The growth of China’s luxury market in 2020 has been driven in part by the rapid adoption of e-commerce following last year’s Covid-19 outbreak. BoF.
Growth for the mainland Chinese luxury market is expected to climb by 48 percent to reach almost 346 billion yuan (around $52 billion) by the end of the year, according to Bain’s annual China luxury report released today in partnership with Tmall Luxury Division.
This meteoric growth, driven in part by the repatriation of luxury spending and acceleration of e-commerce adoption as a result of Covid-19 and international travel restrictions, is forecasted to continue through 2025. It stands in stark contrast with the global luxury market, which the report estimates shrank by 23 percent this year due to store closures and low demand.
To be sure, growth hasn’t occurred evenly. China’s north and northeast regions underperformed in contrast to the south, east and southwest; categories like leather goods and jewellery led the way, followed by ready-to-wear clothing and shoes, beauty and timepieces. It’s also worth noting that repatriation has only managed to offset around half of the heavy losses luxury brands are feeling in Europe and elsewhere; tourist consumption, which has fallen by an estimated 70 percent is far from fully recovered.
Bain predicts that where global conditions are unlikely to fully recover in the next year or even two, Chinese shoppers will remain cautious about travel for at least a year, making domestic destinations like Hainan key touchpoints for brands. It also noted that shoppers from or younger than the Post-’80s generation continue to drive growth and that online shopping habits adopted mid and post-pandemic are here to stay.