Big brands fret over China as middle-class spurns luxury
Chloe Kou, a 28-year old beauty brand marketing manager from Shanghai, won't be buying her usual "one or two" high-end handbags this year. Instead, she plans to save not spend, and that is a problem for luxury brands.
China's current zero-Covid policy, with its attendant lockdowns, restrictions and economic impact have taken their toll on consumers' financial security.
"Luxury clothing or handbags, I definitely think are unnecessary right now, [because of] the uncertainty around my financial situation," Kou said.
"I definitely feel that we need to protect ourselves from this uncertainty around the economy," she said.
If she is typical of many young, urban, middle class professionals in cities around China, that is bad news for luxury brands which have relied heavily on mainland China for stellar growth in recent years.
Last year, the country accounted for 21 per cent of the world's personal luxury goods market, behind North America and Europe, according to consultancy Bain & Co. It is expected to become the top market by 2025.
As life returns to normal in many places, luxury sales have spiked in recent quarters, most notably in the United States, but falling sales in China threaten the growth ambitions of luxury brands.