How young Chinese consumers are reshaping global luxury?
McKinsey & Company has just published the 2019 edition of its annual report "China Luxury", which analyzes the habits of young Chinese consumers in spending luxury goods and the impact of their consumption for the sector.
The report shows that the new generation of Chinese consumers, mostly from the upper-middle classes, is making a significant contribution to the growth of the global luxury goods market, despite the current economic slowdown in China. The weight of these consumers should increase in the coming decades.
Among the key lessons of this study
Chinese consumers are expected to contribute about two-thirds (65%) of global growth in luxury spending by 2025. In 2018, Chinese consumers spent in China and abroad, the equivalent of 115 $ 1 billion in luxury goods, a third of global spending. This amount should reach not less than $180 billion by 2025, which would bring to 40% the share of these consumers in global luxury spending.
The younger generations (post 80's and 90's) make up the vast majority of luxury buyers in China. Indeed, Generation Y, which has nearly 10.2 million luxury consumers, accounted for more than half of the country's total luxury spending in 2018.
Chinese consumers prefer both the points of sale and digital channels to learn and buy luxury goods. Physical networks accounted for 92% of Chinese consumer luxury spending in 2018. These in-store purchases would still account for 88% of the market in 2025. At the same time, online sales are expected to more than double, with a growth rate of 12% per year.
If the search for information on luxury goods is rather online, human interactions - whether in person or by message - are crucial to trigger the act of purchase among young Chinese consumers. Sales advisors play a vital role. Among the channels considered decisive for young Chinese consumers, the suggestions made by the advisers at the point of sales came first (49% of those surveyed). WeChat messages are in third place (21%), just after the in-person fitting (35%).
Many of the young Chinese consumers interviewed during the survey claim to perceive luxury as a form of "social capital" that allows them to stand out. This feeling is intensifying among the youngest among them: more than half of the sample and nearly 70% of consumers born after the 1990s say they buy luxury to "feel different rather than integrate into the society ".
Louis XIII Black Pearl
By Katya PELLEGRINO