Chinese wealthy consumers are not leaving mega luxury brands behind
According to a recent series of reports by EXANE, expectations of more moderate growth – and adverse FX – have prompted China’s luxury sector to be far less popular than in recent past. One of the most interesting insights from these reports is that the assumption Chinese consumers have all sophisticated and are leaving mega-brands behind is wrong!
Louis Vuitton still reigns supreme in Shanghai. According to EXANE’s Luca Solca ”the notion that small is beautiful and the expectation that smaller brands (like Tod’s) should do better in China is clashing with the reality that when demand moderates, consumers focus on a shorter list of “investment grade” brands.
EXANE BNP Paribas expects Chinese consumers to remain a key growth factor for the luxury goods market, in the medium-term and in Full Year 2014. More people spend more money on luxury goods in Shanghai than in New York. 42% of consumers interviewed in Shanghai spent more than USD1k on handbags in the past 12 months (only 11% in NYC), 29% spent more than USD1k on high-end RTW (8% in NYC) and 14% spent more than USD1k on shoes (5% in NYC).
By contrast, only 33% spent less than USD500 on handbags in Shanghai (72% in NYC), 51% spent less than USD500 on RTW (79% in NYC), and 67% spent less than USD500 on shoes (87% in NYC).