As China emerges from the aftermath of the coronavirus pandemic, luxury brands are striving to regain the attention of its consumers. In April this year, Gucci owner, Kering experienced an 11 per cent decline in sales for the first quarter, attributed to challenging market conditions in China.
According to Fflur Roberts, Head-Luxury, Euromonitor International, Gucci is not the only brand grappling with the impact of reduced domestic spending in China. Luxury brands with a strong presence in the country, such as Louis Vuitton, are implementing strategies to entice back their ‘very important clients’ (VICs). Louis Vuitton recently hosted a ‘Voyager’ show in Shanghai, collaborating with contemporary Chinese artist Sun Yitian and featuring leading pieces adorned with bold colors and cartoon-like animals.
The event was attended by leading Hollywood celebrities like Cate Blanchett and Jennifer Connelly alongside Chinese megastars and brand ambassadors Liu Yifei and Jackson Wang. .
Meanwhile the parent company of Louis Vuitton, LVMH reported a modest growth rate in sales during the quarter as the overall luxury market in China has slowed down. Prada and Hermes, however, exceeded analysts' expectations in the first quarter, indicating pockets of strength in the market.
Despite these successes, there's a notable shift in consumer behavior towards experiential luxury over luxury goods, as highlighted in a report by research firm Hurun. Factors such as the absence of high-spending Chinese tourists during the pandemic have impacted Europe's luxury goods sector, prompting global brands to tailor their offerings and events more closely to the Chinese market.
Lisa Nan, Correspondent, Jing Daily observes, there is a cautious and value-driven approach among Chinese luxury consumers, with some checking the second-hand market value of handbags before purchasing. This cautious sentiment underscores the challenging outlook for the luxury market, although China's considerable population of individuals with high net worth remains an opportunity for brands.
Overall, as China's luxury market navigates through economic uncertainties and changing consumer preferences, brands are advised to exercise caution while recognising the enduring potential of this lucrative market segment.
