China has been one of the major contributors to the growth of the global luxury apparel market , representing the largest share of 33% in the global luxury products market in 2015. Although China’s dominating position in the market is very much likely to continue, the consumption of luxury apparel in China is expected to slow down, mainly because of the economic downturn and other factors.
According to a report from Reportlinker, the total consumption of luxury apparel in China reduced by 4.6% year on year to RMB72.62 billion in 2014, mainly because China continued to promote anti-corruption policies and China’s economic growth was slowed. After another fall in sales in 2015, it is estimated that the total consumption of luxury apparel products in China will continue to shrink through 2016-17. Currently, clothing is one of the top segments of luxury products in China, accounting for over half of the total luxury sales every year.
Despite the overall decline in luxury apparel consumption over the last few years, several luxury apparel brands have maintained steady growth. Armani, Burberry and Chanel saw continuous sales growth in women’s clothing; Bvlgari, Cartier and Chow Tai Fook in jewelry, and Chanel, Dior, Estée Lauder in cosmetics.
In contrast to the decreasing sales of luxury apparel in China domestically, tourism shopping and luxury spending from Chinese consumers are increasing in the global markets. Hong Kong used to be the most popular luxury apparel shopping destination for Chinese consumers, but now more and more Chinese consumers prefer to go to Japan, South Korea and Europe for shopping, due to lower VAT than in China. Japan was a particularly popular destination, as sales in luxury items are estimated to have increased by 251% since 2014. The significant increase in luxury items purchased by Chinese shoppers in Japan is also attributed to a more open visa policy, which has attracted more Chinese tourists over the last few years.
In order to cope with the global economic downturn and Chinese consumers’ changing spending behaviours in regards to luxury apparel products, some of the world’s top luxury apparel brands such as Burberry, Chanel, Louis Vuitton, Gucci and Prada, have already taken action over the past two years to change their sale strategies in China, including adjusting price spread, reducing the number of stores, and integrating E-commerce.
The Italian luxury fashion house Prada has reduced the prices of clothing, bags and other products by about 10% over its 40 exclusive stores in 24 cities in Mainland China since 2015. As the most popular luxury fashion brand in China, the British brand Burberry achieved a market value of USD5.87 billion in 2015 as the sixth-largest global luxury brand. As of the early 2016, it had opened 59 stores in China, a decrease of 10 stores from 2014. While the French luxury giant Chanel raised the prices of bags, leather goods, clothing and other products in the European market by 20% in 2015, prices of the above commodities in China were lowered by 20% in the same year.
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