Global luxury market loses 50M customers; China sales to fall 20% in 2025

What happened Global sales of personal luxury goods are projected to decline by 2% this year, one of the weakest performances on record, according to Bain & Company. This marks the first decline in the personal luxury sector since the 2008 financial crisis, excluding the pandemic. The report highlights a shift by luxury brands toward higher price bands, which, combined with weaker consumer confidence due to global economic challenges, has led many to reduce their purchases, especially in markets like China. In China, sales of personal luxury goods are expected to drop by 20% to 22% over the next year, driven by price hikes, economic uncertainty. A global luxury consumer base that has shrunk by 50 million people over the past two years, states the Bain report may be a reflection of this. Recovery is not expected until the second half of 2025 at the earliest. In other news, a downturn in China’s mainland property sector has compelled Hong Kong’s tycoons to sell their high-end homes, often at discounts of up to 50%. Some of the city’s wealthiest individuals are offloading their luxury properties at steep discounts, as reported by The New York Times. China’s housing market has continued to decline in recent months, with property sales by floor area falling 15.8% YoY between January and October, according to press reports. The Jing Take China’s economy and consumer activity have shown signs of modest recovery in recent months, with retail sales rising nearly 5% YoY in October. Retail sales increased by 4.8% in October, up from 3.2% in September, the fastest growth since February. Experts believe this uptick in sales could be attributed to the early start of the annual Double 11 (Singles’ Day) shopping event, which began in mid-October, weeks earlier than last year. Although sales of personal goods are forecast to decline, luxury spending on experiences like hospitality and dining is expected to rise, according to Bain. This reflects a growing trend among Chinese consumers, who are increasingly valuing immersive, experience-driven luxury over traditional product ownership. With the personal luxury sector facing its first significant contraction since 2008 and China experiencing a shrinking luxury customer base, brands will need to prioritize building trust and loyalty with consumers by offering personalized services, exclusive access, and shopping rewards to enhance engagement and retention. Meanwhile, China is reportedly planning further tax reductions to support its struggling housing sector, states Bloomberg. Regulators are developing a proposal to allow major cities, including Beijing and Shanghai, to reduce the deed tax for homebuyers to as low as 1%, down from the current rate of up to 3%. Analysts predict that lower interest rates could spark a recovery in property prices next year. This comes after the recent introduction of the government’s economic stimulus measures, which began in September, and as the country braces for potential challenges following Donald Trump’s re-election as US president. Earlier this month, China announced a 10 trillion RMB ($1.4 trillion) debt initiative aimed at alleviating financial pressures on local governments and supporting sluggish economic growth. This latest package signals a shift from China’s previous large-scale stimulus plans to boost growth, focusing on “repairing” municipal balance sheets as a long-term strategy rather than injecting funds directly into the economy, according to Reuters. In the coming year, brands will need to stay agile in responding to China’s evolving consumer spending habits and economic policies. Understanding the impact of these changes will be crucial for adapting strategies for 2025 and beyond. Additional reporting by William Zhou. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Global luxury market loses 50M customers; China sales to fall 20% in 2025

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Published November 15, 2024

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Global luxury market loses 50M customers; China sales to fall 20% in 2025