Chinese consumers have significantly shifted their luxury consumption habits to the domestic market during the three-year-long pandemic, and this trend appears to be irreversible.

Despite the reopening of international borders, local shoppers are now choosing to splurge on luxury goods within their own country. Data compiled by alternative data provider Sandalwood Advisors reveals that in April, 62 percent of luxury spending by Chinese consumers occurred domestically, a significant increase compared to the 41 percent recorded during the same period in 2019.

This shift in consumer behavior is reflected in the robust sales performance of domestic high-end retailers. Industry experts believe that Chinese consumers are reevaluating their lifestyles in the aftermath of the pandemic.

This change in mindset has been reinforced by the increasing number of luxury stores and marketing activations in China, as well as global price adjustments, which have dampened Chinese consumers' enthusiasm for shopping abroad. In 2021, China accounted for 55 percent of all new luxury store openings, with a further 41 percent in 2022, according to a report by global real estate services provider Savills.

Recognizing this shifting consumer landscape, luxury brands such as Hermès are prioritizing their presence in China.

Another factor contributing to the preference for domestic luxury consumption is the importance of service. Luxury brands are responding to this demand by upgrading their retail presence in China.