Global Luxury Market Shrinks 1-3% in Q1
Analysis has emerged indicating that global luxury market sales contracted in the first quarter of this year due to the impact of China's economic slowdown. In particular, a consumption slump similar to the atmosphere in the United States during the recent global financial crisis has appeared in China, putting overall luxury demand under pressure.
On the 25th, Chinese economic media Caixin cited the '2024 Global Luxury Market Survey' report released by consulting firm Bain on the same day to report this. The report explained, "Downward pressure on the macroeconomy is slowing the growth rate of luxury markets in most regions," adding, "The Chinese market is also under pressure."
Furthermore, it diagnosed, "This is due to the rebound in outbound tourism from China, domestic demand weakness amid increasing economic uncertainty, and slowing consumption among middle-class consumers," noting, "It is similar to the atmosphere seen in the U.S. during the 2008-2009 global financial crisis."
In fact, global luxury brands' performance in China is showing a sluggish trend. LVMH's sales in the Asian market excluding Japan decreased by 6% year-on-year in the first quarter, while the Asia-Pacific market sales of the Kering Group, which operates brands such as Gucci, Balenciaga, Bottega Veneta, and Chlo?, and the Richemont Group, which owns brands like Cartier, Van Cleef & Arpels, and Montblanc, declined by 19% and 12% respectively. Kering Group explained, "Sales decline pressure intensified particularly due to the downturn in the Chinese market environment and the repositioning strategies of some brands."
Bain viewed that the European and Japanese markets are showing rapid resilience thanks to improved tourism demand. The report stated, "The sharp depreciation of the yen has led to a surge in tourists visiting Japan," adding, "In addition to visiting famous spots across Japan, emerging luxury stores have also become essential stops on trips."
Other factors cited for the sales slump include delayed improvement in unemployment rates, reduced luxury consumption by younger generations who feel bleak about future prospects, and continuous price increases by brands. The report assessed, "Younger generations are reducing luxury consumption, while Generation X (born 1965?1980) and Baby Boomers (born 1946?1964) are increasing spending, prompting brands to change their brand strategies."
It added, "Whether consumers still perceive the value after luxury brands' price hikes will be a key factor in maintaining stable growth across sectors."
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