According to a new report published in mid-June by management consulting firm Bain & Company, global sales of personal luxury goods will witness a year-on-year rise of only 4% at most in 2024. This would represent the market’s slowest growth since the COVID-19 pandemic. 

Although sales in this segment plummeted as the COVID-19 crisis intensified, one major factor behind the decline this time is said to be wealthy Chinese consumers’ increasing reticence about the prospect of splashing out on high-end goods during economic uncertainty. 

Are the Chinese experiencing unprecedented ‘luxury shame’?

Bain has even suggested that sales of clothes, accessories, and beauty products could be left essentially flat in the prestige market, with little if any obvious improvement on the sales figures from a year prior. So, what could be to blame for such a dispiriting prediction? 

“For the first time in history, we have in China the so-called luxury shame,” Bain partner Frederica Levato explained. Although the more affluent Chinese have recommenced travelling, their expenditure overseas is markedly different to how they have continued to shop on the Mainland. 

This could have worrying repercussions for UK-based luxury retailers catering largely to the Chinese market. However, if such companies do require alternative solutions to help keep their survival and growth prospects on track, our own luxury digital marketing consultancy at Skywire London can provide them. 

The picture is still more complex than you might think 

“The market is, for sure, in a stall moment,” Levato has acknowledged, adding: “After two years and a half of growth, there is a fatigue in personal luxury goods.”

Your own prestige brand might have noticed these challenges in the present climate. The Hamburg-headquartered Beiersdorf, for example, recently admitted to facing a “strongly declining” Chinese market for luxury skincare. However, the company’s La Prairie creams have actually gained market share. 

Indeed, there are signs that brands right at the summit of the luxury market are — at least for now — weathering the storm. Here, we point to the example of Hermès — which, in contrast to a number of its competitors, has seen its shares flourish over the last year. 

Levato observed that many shoppers have not so much reined in big-money purchases altogether, but instead largely just switched to making private appointments and targeting relatively understated fashion pieces rather than “very visible and flashy items”. 

The importance of a flexible marketing strategy 

Levato added that shoppers’ current taste for discreet buys might not last too long, being tied as it is to specific economic matters. Nonetheless, with recent increases in Europe’s tourist numbers having seemingly driven up luxury sales, there remains good cause for optimism. 

Are you wondering how to put together a business plan that you would be able to easily tweak and adjust in response to sudden, unexpected challenges? If so, you are welcome to reach out to our luxury digital marketing consultancy by emailing hello@skywire.co.uk today. 

Photo by Hanson Lu on Unsplash