Sailing Through Uncertainty: An Overview of China's Personal Luxury Goods Market
The personal luxury goods market in mainland China has experienced a tumultuous recovery throughout 2023. After facing a downturn due to the pandemic, the market managed to sustain double-digit growth rates over the year, despite the roller-coaster conditions. However, the recovery momentum in 2024's first quarter is being dampened by a resurgence in overseas consumption, particularly in the Japanese market.
When comparing per capita luxury consumption among high-income groups in major countries, China has more than double the potential of developed nations. Furthermore, China boasts the second-largest middle- and high-income consumer base, trailing only the US, and this segment is growing at a robust 21% annually, far outpacing other countries.
Thriving Amid Change: Four Key Trends and Insights into Chinese Consumers
Trend 1: Segment Differentiation and Pursuit of Unique Value
Light Users: Treat Luxury as a "Reward"
Light users (spending less than 50,000 RMB on luxury goods in 2023) often buy for special occasions or self-reward. Budget constraints lead them to prefer classic, versatile products. This group includes college students, white-collar workers, and first-time male gift buyers. Their purchasing journey, lasting 2-6 months, involves cautious decision-making and extensive research from diverse information sources.
Moderate Users: View Luxury as a "Symbol"
Moderate users (spending 50,000 to 300,000 RMB on luxury goods in 2023) seek social status and identity through high-priced items like jewellery and watches. This group includes elite white-collar workers, corporate managers, business owners, and overseas students.
Heavy Users: Integrate Luxury into Their "Daily Life"
For heavy users (spending 300,000 RMB+ on luxury goods in 2023), luxury is a lifestyle. They seek unique services and exceptional rewards, purchasing high-end jewellery, watches, pet supplies, and furniture. This group includes affluent women in major cities, business owners, senior executives, and children of ultra-high-net-worth families studying abroad.
Trend 2: Advanced Decision-Making and Multi-Dimensional Information Search
"See-Search-Buy" Consumer Mindset
Research shows that 66% of respondents proactively research before buying, focusing on product details, prices, rankings, and new seasonal releases. As consumers become more mature and spend more, their search interests deepen, evolving from basic education to styling tips and core brand values.
Trend 3: Rational Consumption and Return to Official Channels
50% of consumers plan to adopt a cautious approach to luxury purchases in 2024, conducting thorough research before buying, while 48% intend to reduce their luxury spending.
Preference for Official Channels
Brand official channels are the top choice for consumers. 62% of consumers prefer official channels for discovering brands.
Trend 4: Embracing Cutting-Edge Technology
High Expectations for Technological Integration
Over 90% of consumers are enthusiastic about the flexible use of advanced technologies in luxury marketing, particularly in personalized services and efficient recommendations. Consumers look forward to new AIGC applications throughout their journey, including:
AIGC to enhance information search efficiency, such as image recognition.
Precise personalized recommendations for products and new brands.
360-degree, realistic virtual try-ons.
Comprehensive shopping guides, including 24-hour online support via intelligent systems.
The dynamic Chinese personal luxury goods market presents both challenges and opportunities. Brands must navigate short-term uncertainties while strategically positioning themselves for long-term growth. Understanding and adapting to consumer trends—segment differentiation, advanced decision-making, rational consumption, and technological integration—will be crucial for success in this evolving landscape.
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