Detailed Findings:
Luxury Slowdown in 2024: The luxury market in China experienced a slowdown in 2024.
Cautious Optimism for 2025: Despite projections of a further decrease in spending, there's cautious optimism for renewed consumer demand as the Year of the Snake approaches.
Spending Tiers Shift:
The lower tier of consumers (spending less than RMB 22,499 or £2,450) decreased.
The higher tier (spending over RMB 52,500 or £5,660) increased by 3% in Q4 2024, reaching 19% of respondents, near the Q3 2023 peak of 21%.
The middle tier remained stable.
Q1 2025 is projected to see a decline in higher-tier spending by 11 percentage points and growth in the middle tier.
Consumer Concerns:
Concerns about the economy and job security decreased by 5% and 2% respectively, compared to the previous year.
Concerns about US-China relations increased by 18% year-on-year, and 8% since Q3 2024.
Government Stimulus: A new stimulus package aims to reduce mortgage rates and downpayment regulations.
40% of those not planning to buy a home in the next year are now encouraged to do so.
34% of those already planning to buy a home have sped up their timeline.
37% are looking to purchase a more expensive property.
Brand Performance:
Chanel remains the most-purchased luxury brand, with purchase rates up 4% compared to the previous year. Chanel held a runway show in Hong Kong and debuted a collection in Hangzhou. The pre-launch short film for the Hangzhou show gained over 9 million views on Weibo. "Chanel in Hangzhou" had 210 million views on Weibo's Hot Search list.
Prada saw a 10 percentage point increase in purchase intent over the past year.
Hermès, Roger Vivier, Celine, Tod's, and Mulberry each saw a 5 percentage point increase.
Several OTB Group stores (Maison Margiela, Jil Sander, Marni) have closed in Mainland China.
Category Performance:
Jewelry was the most-purchased category in Q4 2024 at 41%.
Small leather goods and casual shoes saw the largest growth over the past year, up 11% and 9% respectively.
Secondhand Market Growth:
The secondhand luxury market has grown over 30% annually since 2020.
50% of luxury consumers purchased secondhand or vintage luxury goods in Q4 2024, up from 46% in Q3 2024.
Shopping Festivals:
618 (June) saw its first drop in e-commerce sales in eight years.
90% of luxury consumers participated in Singles Day (November) in 2024.
43% spent more on Singles Day than the previous year.
Tmall reported a 46% increase in year-on-year sales during Singles Day.
Taobao saw a 50% increase in order volume during Singles Day.
On Singles Day, 34% spent less than RMB 4,000, 47% spent between RMB 4,000 and RMB 14,999, and 9% spent over RMB 15,000.
Skincare (51%), personal fragrance (46%), and makeup (31%) were top beauty buys during Singles Day.
Jewelry (49%), casual shoes (39%), and handbags (36%) were top fashion buys during Singles Day.
Miu Miu, Zegna, and Tory Burch saw volume uplifts of more than threefold on JD.com during Singles Day.
Shift in Influencer Landscape: A move away from traditional influencers towards trusted experts and brand ambassadors.
Year of the Snake:
Begins January 29, 2025.
Presents a challenging narrative for brands due to the snake's mixed symbolism.
Brands are launching campaigns early: Jaeger-LeCoultre (limited-edition watch), To Summer (fragrance), Burberry (collection in red), Nike (sneaker design).
Travel Intentions:
90% of luxury consumers plan to travel during the 2025 Lunar New Year.
59% plan to travel domestically (up 7% from 2023).
52% plan to travel within Asia (up 10%).
34% plan to travel outside of Asia (down 3%).
Survey Methodology: Vogue Business surveyed 532 luxury consumers in China in March 2023, 502 in June 2023, 506 in September 2023, 506 in December 2023, 503 in March 2024, 500 in June 2024, 500 in August 2024, and 500 in November 2024, aged 18-64, across various genders and age groups, with a minimum spend of RMB 1,000 on a single item or RMB 8,500 total in the last 12 months.
Key Takeaway: The Chinese luxury market remains complex and challenging, with consumer behavior characterized by "whiplash" between optimism and caution. While spending is projected to decrease further, there are pockets of resilience and growth, particularly in the higher-spending tier and in specific categories like jewelry. Brands that invest in localized strategies, authentic storytelling, and cater to evolving consumer preferences are better positioned to succeed.
Main Trend: Cautious Consumption Amidst Uncertainty
Description of the Trend: Chinese luxury consumers are navigating a period of economic uncertainty and shifting priorities, leading to a more cautious and discerning approach to spending. They are carefully considering their purchases, prioritizing quality and value, and seeking authentic brand experiences.
Consumer Motivation:
Economic Uncertainty: Concerns about the overall economy and job security are influencing spending habits.
Value for Money: Consumers are seeking high-quality products that justify their price.
Authenticity and Trust: A preference for brands that demonstrate genuine connection and transparency.
Personalized Experiences: Desire for tailored experiences and recommendations from trusted sources.
What is Driving the Trend:
Slowing Economic Growth: China's economy is experiencing a period of slower growth.
Government Policies: Stimulus measures and policy shifts are impacting consumer confidence.
Geopolitical Tensions: Concerns about US-China relations are adding to uncertainty.
Evolving Consumer Values: A shift towards more mindful and considered consumption.
Motivation Beyond the Trend: A desire for stability and security in uncertain times, a focus on long-term value rather than immediate gratification, and a growing emphasis on personal values and authenticity in consumption choices.
People the Article is Referring To: Chinese luxury consumers.
Description of Consumers: The article focuses on Chinese luxury consumers, who are defined as having spent at least RMB 1,000 on a single luxury item or RMB 8,500 total in the past 12 months. They are segmented into different spending tiers (lower, middle, and higher) and their behavior is analyzed across various categories and purchase channels. The age range is 18-64.
Conclusions:
The Chinese luxury market will remain challenging in 2025.
Consumer confidence is fragile and susceptible to macroeconomic fluctuations.
Brands need to adapt to evolving consumer preferences and prioritize value, authenticity, and personalized experiences.
The secondhand market is a growing force and should be considered in brand strategies.
Localized marketing and cultural relevance are crucial for success.
Implications for Brands:
Invest in building strong relationships with Chinese consumers through authentic storytelling and localized campaigns.
Offer a range of price points to cater to different spending tiers.
Prioritize quality and craftsmanship to justify higher prices.
Consider integrating the secondhand market into their China strategies.
Adapt to the changing influencer landscape by partnering with trusted experts and brand ambassadors.
Implications for Society:
Potential slowdown in overall luxury consumption in China.
Growing importance of the secondhand market, which could contribute to a more sustainable approach to luxury.
Shifting consumer values towards more mindful and considered consumption.
Implications for Consumers:
More options for purchasing luxury goods, including both new and secondhand.
Greater emphasis on quality and value for money.
Increased opportunities to engage with brands on a more personal level.
Implication for Future:
Brands will have to continue to evolve to meet Chinese consumer demands.
China will remain a key market for luxury brands.
Consumer Trend (Detailed Description): Value-Driven Luxury: Chinese luxury consumers are increasingly prioritizing quality, craftsmanship, and long-term value over brand logos and conspicuous consumption. They are seeking products that are both luxurious and practical, and that offer a good return on investment.
Consumer Sub Trend (Detailed Description): Secondhand Luxury Embrace: A growing acceptance and adoption of the secondhand luxury market among Chinese consumers, driven by a desire for accessible luxury, unique vintage pieces, and a more sustainable approach to consumption.
Big Social Trend (Detailed Description): Shifting Status Symbols: A gradual shift away from traditional status symbols based solely on brand names and price tags towards more nuanced expressions of status that incorporate personal style, knowledge, and discerning taste.
Local Trend (Detailed Description): The rise of domestic Chinese brands that cater to the specific needs and preferences of local consumers, such as To Summer, which launched a Year of the Snake fragrance collection. Domestic travel is preferred. 59% plan to travel domestically (up 7% from 2023). 52% plan to travel within Asia (up 10%). 34% plan to travel outside of Asia (down 3%).
Worldwide Social Trend (Detailed Description): Conscious Consumption: A growing global movement towards more mindful and ethical consumption, with consumers considering the environmental and social impact of their purchases.
Name of the Big Trend Implied by Article: Strategic Luxury Adaptation
Name of Big Social Trend Implied by Article: Authenticity Seeking
Social Drive (Detailed Description): Informed Discernment: Consumers are driven by a desire to make informed and intelligent purchasing decisions, seeking out information, expert opinions, and authentic brand experiences to guide their choices.
Learnings for Companies to Use in 2025:
Understand the nuances of Chinese consumer sentiment and adapt to evolving preferences.
Prioritize quality, craftsmanship, and long-term value in product offerings.
Develop authentic and culturally relevant marketing campaigns.
Embrace the secondhand market and consider integrating it into their strategies.
Build trust with consumers by engaging with knowledgeable experts and brand ambassadors.
Strategy Recommendations for Companies to Follow in 2025:
Localized Storytelling: Develop marketing campaigns that resonate with Chinese culture and values.
Tiered Pricing Strategies: Offer a range of products at different price points to cater to various consumer segments.
Quality and Value Proposition: Emphasize the craftsmanship, durability, and long-term value of their products.
Secondhand Market Integration: Explore partnerships with secondhand platforms or develop their own resale programs.
Expert Endorsements: Collaborate with trusted experts and brand ambassadors who can speak authentically to the quality and value of their products.
Final Sentence (Key Concept): The Chinese luxury market in 2025 will be defined by Cautious Consumption Amidst Uncertainty, Value-Driven Luxury, and Secondhand Luxury Embrace within a broader context of Strategic Luxury Adaptation and Authenticity Seeking, requiring brands to demonstrate Informed Discernment in understanding and responding to evolving consumer needs through localized strategies, transparent communication, and a focus on quality, value, and authentic experiences.
What Brands & Companies Should Do in 2025 to Benefit from the Trend and How to Do It:
Brands should capitalize on Cautious Consumption Amidst Uncertainty by:
Building Trust and Transparency: Communicate openly and honestly with consumers about their products, pricing, and brand values.
Offering Value and Quality: Focus on craftsmanship, durability, and long-term value to justify prices and attract discerning consumers.
Developing Localized Strategies: Tailor marketing campaigns and product offerings to resonate with Chinese culture and preferences.
Embracing Digital Channels: Utilize Chinese social media platforms and e-commerce channels to connect with consumers and build brand awareness.
Providing Personalized Experiences: Offer customized services, exclusive events, and tailored recommendations to enhance customer engagement and loyalty.
Final Note:
By implementing these strategies, brands can successfully take advantage of Cautious Consumption Amidst Uncertainty, Value-Driven Luxury, and Secondhand Luxury Embrace. They can market to consumers who are looking for a high-quality, authentic, and value-driven luxury experience and are interested in informed discernment, long-term value, and personalized experiences. They can be a part of the Strategic Luxury Adaptation trend by demonstrating a deep understanding of the Chinese market and adapting their strategies to meet the evolving needs and preferences of consumers, ultimately seeking Authenticity Seeking in their brand interactions and purchases.
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