China 2025 luxury market forecast: Key consumer trends

Despite a challenging year of mounting economic uncertainties and a renewed bout of “luxury shame,” mainland Chinese consumers remain a key clientele for global brands. The country’s uncertain economic outlook shook consumer confidence in 2024, leading to a forecast of mid-single-digit luxury sales growth, down from some 12% in 2023, according to Bain and Company. However, this muted performance does not indicate a loss of appetite. Chinese tourists remained top customers for LVMH and Kering brands in markets like Japan — spending an estimated 20-25% of their luxury budgets overseas, according to press reports. Meanwhile, luxury brands saw strong enthusiasm from younger consumers for events and extensions, such as branded cafés and food and beverage collaborations. Ultimately, Chinese consumers may be holding back on some big-ticket purchases, yet demand for luxury brands and affordable experiences remains intact. With all of this in mind, here are the top trends that will define the mindsets and behaviors of Chinese luxury consumers in 2025 and beyond: Prioritizing IRL moments and unique experiences Luxury consumption is evolving beyond traditional purchases, with in-real-life experiences like travel, fine dining and exclusive events gaining greater market share. Chinese tourists are increasingly returning to international hotspots, with Japan standing out as a preferred destination, seeing a 117% increase in tax-free spending by Chinese tourists this year compared to 2019 levels. Meanwhile, Chinese tourists continue to flock to off-the-beaten-path destinations — particularly in eastern Europe and southeast Asia — in search of new experiences. Gen Z travelers are at the forefront of this shift, prioritizing unique cultural and culinary experiences over mere sightseeing. According to Oliver Wyman, 62% of Chinese Gen Z tourists listed food as their primary motivator for international travel, aligning with a broader trend in which affluent Chinese consumers now look for a blend of wellness, culture, and exclusivity in their travels. Brands that deliver exclusivity and engaging digital content are best positioned to resonate with younger consumers who value authenticity over traditional status symbols. This year, Gucci’s narrative-driven “Ancora Red” exhibition, which garnered over 1.5 billion views, and Ami’s “Le Paris Paris Bag Hunt” campaign in Shanghai, with 17.9 million hashtag views, highlight the success of integrating lifestyle marketing with immersive engagement. As value-conscious consumers seek more from brands, experiential luxury will become increasingly important. In 2025, the shift from quantity to quality – and from material goods to experiences – will likely intensify, presenting an opportunity for luxury brands to offer even more personalized and exclusive experiences, along with value-added perks. Navigating price hikes and changing perceptions of value This year, price- and value-conscious consumers sought better deals at duty-free shops, overseas boutiques, and secondhand stores as brands enacted significant price hikes, sometimes in the double-digits. Dior and Chanel, for example, raised their like-for-like prices by around 50% between 2020 and 2023, while Moncler and Prada increased theirs by around 45% during the same period, according to The Financial Times. Consumers remain highly sensitive to hikes they see as excessive, with Xiaohongshu users often highlighting when and where increases are set to kick in. This was the case for Van Cleef & Arpels earlier this year, which saw a buyer frenzy emerge at its China and Japan boutiques before it enacted an 11% price increase. In 2025, brands will likely encounter greater resistance to double-digit price hikes as the post-pandemic “revenge spending” surge comes to an end, leading to a more cautious consumer mindset. In 2025, brands will likely encounter greater resistance to double-digit price hikes as the post-pandemic “revenge spending” surge comes to an end, leading to a more cautious consumer mindset. The backlash faced by brands like Burberry – which saw a 21% drop in sales volume for certain new collections, according to the BBC — serves as a cautionary tale of how unchecked price hikes can diminish brand loyalty. This suggests that pricing power among luxury brands may no longer be as robust as it once was. Brands will need to justify price increases by demonstrating added value, quality, or exclusivity. Secondhand luxury: Hot, but not overheated Over the past half-decade, mainland Chinese shoppers have embraced secondhand luxury fashion and handbags, following the lead of their Japanese and South Korean counterparts. iResearch predicts that China’s secondhand luxury sector will reach $30 billion by the end of next year, up from around $8 billion in 2020, according to Reuters. A key development in 2024 was the merger of Zhuanzhuan and Hongbulin (Plum), which combined Hongbulin’s resale expertise with Zhuanzhuan’s existing pre-owned electronics platform. This consolidation marks a significant shift in China’s secondhand luxury market, enabling Zhuanzhuan to strengthen its market position and expand into a lucrative sector valued at over 3 trillion RMB ($420 billion) by year’s end. Meanwhile, celebrities and influencers on Douyin and Xiaohongshu have popularized vintage items, driving mainstream acceptance of pre-owned luxury goods. Today’s consumers now prefer rare archive pieces or well-preserved items like Bottega Veneta’s Andiamo or Hermès’ Picotin over more saturated items like the Gucci Dionysus. Considering China’s secondhand market still lacks a dominant player in the luxury segment, there is little reason to expect overheating next year. In all likelihood, we will see a limited price war continue to simmer between players like Alibaba’s Idle Fish and the recently merged Zhuanzhuan and Hongbulin as they vie for market share and fend off potential competition from global platforms like Vestiaire Collective or The RealReal. global platforms like Vestiaire Collective or The RealReal. More of the same? The big question going into 2025 is whether it will be another year of consumers holding back on big-ticket items or a return to the more enthusiastic pre-pandemic spending. According to recent projections, 2025 may resemble 2024 if consumer spending continues to be closely linked to broader economic conditions. According to the IMF, China’s economic growth is expected to linger around 4.5% in 2025, down from 4.8% in 2024 and 5.2% in 2023. The continued decline of the country’s real estate market and high youth unemployment have hobbled consumer confidence, even as exports have rebounded and Beijing has implemented stimulus efforts. Mainland Chinese luxury consumers will likely continue purchasing high-end items – just more discerningly. Out-of-control price hikes by luxury brands or a failure to boost outreach and perks for very important customers (VICs) will simply not be tolerated in 2025. The challenge for luxury brands is not only to maintain relevance in a fluctuating economic climate but also to evolve in ways that align with changing consumer priorities. Whether by crafting captivating digital experiences, offering exclusive travel opportunities, or participating in the resale market, the coming years will demand agility, creativity, and a deep understanding of China’s luxury landscape.

China 2025 luxury market forecast: Key consumer trends

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Published October 31, 2024

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China 2025 luxury market forecast: Key consumer trends