BrazilMillennials driving luxury retail resurgence in China, shows Bain report
The luxury consumer retail market in China continues to rebound strongly, with Millennials powering 20% growth last year. This newest generation of shoppers, however, has its own ideas on what constitutes luxury, says a new report from Bain & Company.
After its return to growth at the end of 2016 following three years of stagnation, China’s luxury consumer retail market charged further ahead last year with a 20% boost in spending. According to a survey report from management consulting firm Bain & Company, the significant bounce is being chiefly driven by new consumers and the response from leading brands.
As such, the digitally-savvy Millennial brigade of China are now defining luxury trends more than ever, both domestically, and in terms of Chinese consumer’s dominant 32% worldwide market share of personal luxury spending, on the global stage – with the international personal luxury goods sector itself jumping 5% over the last year to reach an estimated worth of over €260 billion.
In terms of the full global luxury market monitored by the consulting firm – which in addition to personal luxury goods includes luxury cars, hospitality and cruises, along with fine foods, wines and spirits, designer furniture, fine art, and private yachts and jets – the combined sector also achieved a 5% increase last year to reach an estimated value of nearly €1.2 trillion.
Here, sales of luxury cars continued to dominate the luxury sector with respect to value, accounting for €489 billion of the total luxury spend – and likewise driven by a Chinese consumer market, which is increasingly geared toward premium models. While figures were up in almost every segment, including a 14% boost to the luxury cruises category due in part to its fresh appeal to Millennials, luxury personal goods together with luxury cars and hospitality accounted for more than 80% of the total market outlay. 
In its latest China Luxury Report and survey of nearly 1,200 Chinese consumers, Bain & Company has found that the reemergent personal luxury goods boom in the country is a result of new consumers rather than a return of old forces; in particular, the Millennials in the 20-34 year age bracket who, globally, have already claimed a 30% share of luxury market spending and account for 38% of its total number of consumers.
“A new China is emerging with new consumers that were not there five years ago that have different profiles, different expectations and different tastes,” Bruno Lannes, Partner at Bain and leader of the company’s Consumer Products and Retail practice in China, said. “This is a new China coming in as opposed to the old China coming back.”
The report also notes that Chinese shoppers are beginning to purchase luxury goods at a younger age and with greater frequency, describing the new crop of consumers as highly knowledgeable about luxury categories. They also have their own opinions on luxury, preferring ‘street casual’, ‘new’ and ‘in-season’ products in a bid to “express their unique personality through distinctive looks,” with, as a result, the fashion and lifestyle categories proving to be the big winners.
Accounting for roughly 85% of the growth in the luxury personal goods market, the Millennials of Gen Y and Z are in turn impacting wider market trends. An earlier Bain & company report on the global luxury sector stated that Millennials are “responsive and engaged beyond expectations, amplifying their spending and advocacy,” adding that they are “entering the market with clear tastes and behaviors, influencing other generations.”
This "'broader Millennial state of mind’ is permeating the luxury industry and changing the ways in which all generations make purchases. This shift also pushes luxury brands to redefine what they deliver to customers, and how they deliver it,” the report stated. Federica Levato, co-author of the report and Partner at Bain in Milan concludes; “It raises the bar in how companies are thinking about their marketing strategies. It was traditionally just beautiful pictures in a landscape with a beautiful product, this is not the case anymore.”
A recent survey report from Big Four professional services firm KPMG predicted that Chinese Millennials would soon eclipse their older counterparts as the country’s biggest consumer retail spenders, noting their growing taste for luxury goods.
Related: Luxury market booms to over €1 trillion thanks to personal goods consumption (Consultancy.uk).
