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Luxury Retailing - China - September 2016

“Consumer attitudes to luxury brands have changed recently as the market has recovered growth, if at a slower pace than before. Attitudes are increasingly focused on experiences rather than only things, and increasingly diverse consumers are choosing from a much wider range of brands. Luxury retailers have to adapt to growing consumer diversity by getting to know their potential and existing customers better, adapting their brands to suit changing consumer needs. This also means adapting retail channels to include overseas and online shopping habits. Future market growth should remain strong, but competition will increase, making it ever harder to luxury brands to remain front-of-mind.”

– Matthew Crabbe, Director of Research, Asia-Pacific

This report looks at the following areas:

  • The travel effect
  • The online experience
  • Persuading the doubters
  • A new breed of luxury

For the purposes of this Report, Mintel has used the following definitions:

Luxury goods are unusual in the retail context in that there is growing vertical integration in the sector. It is the products and brands that are luxury, rather than the retailers. The major luxury groups are taking a greater control of their retail outlets and the practice of wholesaling and licensing is very much in decline.

The concept of luxury goods is inevitably highly subjective. The term ‘luxury’ usually carries with it the idea that there is a very high level of craftsmanship involved and that the products carry a high price tag, deeming the products out of the reach of most mass-market buyers. Unfortunately, they can also carry connotations of ostentation and even “bling”.

This definition issue is further complicated in China, where the rapid pace of economic and social change is mixed with strong cultural influences on what luxury means. The first main section of the Report explores this issue in some detail.

The analysis focuses on three main categories of luxury goods:

  • Fashion & leather goods
  • Fragrances & cosmetics
  • Jewellery & watches.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Market size and forecast
              • Figure 1: China – Total domestic market value for personal luxury products retail, 2011-21
            • Market segmentation
              • Market drivers
                • Regulatory and legislative changes
                  • Companies and brands
                    • Market share
                      • Figure 2: Leading luxury personal products brands’ share of total personal luxury products market in Asia (excluding Japan), 2014/15
                    • Competitive strategies
                      • Advertising and marketing activity
                        • The consumer
                          • Consumer definitions of luxury
                            • Figure 3: Consumer definitions of luxury, June 2016
                          • Consumers who have bought luxury products
                            • Figure 4: Consumers who have bought luxury products, June 2014 and June 2016
                          • Types of luxury products bought
                            • Figure 5: Consumers who have bought luxury products in the last 18 months, June 2016
                          • Retail channels luxury products bought from
                            • Figure 6: Retail channels luxury products bought from, June 2016
                          • Consumer luxury brand purchasing
                            • Figure 7: Consumer luxury brand purchasing, June 2016
                          • Consumer perceptions of luxury products
                            • Figure 8: Consumer perceptions of luxury products, June 2016
                          • Consumer attitudes to luxury products
                            • Figure 9: Consumer attitudes to luxury products, June 2016
                          • Key consumer groups
                            • Figure 10: Key consumer groups according to attitudes to luxury products, June 2016
                          • What we think
                          • Issues and Insights

                            • The travel effect
                              • The facts
                                • The implications
                                  • The online experience
                                    • The facts
                                      • The implications
                                        • Persuading the doubters
                                          • The facts
                                            • The implications
                                              • A new breed of luxury
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Market size and forecast
                                                      • Market segmentation
                                                        • Market drivers
                                                          • Regulatory and legislative changes
                                                          • Market Size and Forecast

                                                            • Recovery, with caveats
                                                              • Figure 11: China – Total domestic market value for personal luxury products retail, 2011-21
                                                            • Forecast methodology
                                                            • Market Segmentation

                                                              • Hard luxury hardest hit
                                                                • Figure 12: China – Personal luxury goods value domestic retail market, 2011-16
                                                                • Figure 13: China – Period growth in personal luxury goods value domestic retail sales value, 2011-16
                                                                • Figure 14: China – Total domestic luxury goods and services market, 2011-16
                                                            • Market Drivers

                                                              • Travel and tourism
                                                                • Virtual and augmented reality in the online luxury experience
                                                                  • Chinese spirits enter the speakeasy cocktail culture
                                                                  • Regulatory and Legislative Changes

                                                                    • Encouraging more domestic luxury consumption
                                                                      • Figure 15: Chinese nationals’ personal luxury goods spending within the global and domestic context, 2012-16
                                                                    • Changes in taxing overseas online shopping
                                                                      • Fighting the online counterfeits
                                                                      • Companies and Brands – What You Need to Know

                                                                        • Market share
                                                                          • Competitive strategies
                                                                            • Advertising and marketing activity
                                                                            • Market Share

                                                                              • L’Oréal Luxe slightly up, LVMH slightly down
                                                                                • Figure 16: Leading luxury personal products brands’ share of total personal luxury products market in Asia (excluding Japan), 2014/15
                                                                                • Figure 17: Leading luxury personal products brands’ total personal luxury products value sales revenues, and % market share, in Asia (excluding Japan), 2014/15
                                                                            • Competitive Strategies

                                                                              • Consolidation
                                                                                • Expansion
                                                                                • Advertising and Marketing Activity

                                                                                  • Cutting prices
                                                                                    • Promoting independent designers
                                                                                      • China-inspired design
                                                                                        • Engaging with “geeks”
                                                                                          • Luxury brand catering
                                                                                            • Building exclusive experience into an online presence
                                                                                            • Company Profiles

                                                                                              • LVMH Moët Hennessy Louis Vuitton
                                                                                                • Figure 18: LVMH: Distribution of revenues, by region, 2013-15
                                                                                                • Figure 19: LVMH: Significance of Asia (excluding Japan) division to segment revenues, 2013-15
                                                                                              • L’Oréal Luxe
                                                                                                  • Figure 20: L’Oréal Group: Net revenues, by division, 2013-15
                                                                                                • Kering Luxury
                                                                                                    • Figure 21: Kering Luxury: Financial performance, 2013-15
                                                                                                    • Figure 22: Kering Luxury: Breakdown of revenue, by product category and by region, 2013-15
                                                                                                  • Hermès Group
                                                                                                      • Figure 23: Hermès: Financial performance, 2013-15
                                                                                                      • Figure 24: Hermès: Sales, by product category, 2013-15
                                                                                                    • Prada
                                                                                                        • Figure 25: Prada: Sales, by product territory, 2013-15
                                                                                                    • The Consumer – What You Need to Know

                                                                                                      • Consumer definitions of luxury
                                                                                                        • Consumers who have bought luxury products
                                                                                                          • Types of luxury products bought
                                                                                                            • Retail channels luxury products bought from
                                                                                                              • Consumer luxury brand purchasing
                                                                                                                • Consumer perceptions of luxury products
                                                                                                                  • Consumer attitudes to luxury products
                                                                                                                    • Key consumer groups
                                                                                                                    • Consumer Definitions of Luxury

                                                                                                                      • Craftsmanship trumps cost
                                                                                                                        • Figure 26: Consumer definitions of luxury, June 2016
                                                                                                                      • The crafting of individualism
                                                                                                                          • Figure 27: Consumer definitions of luxury, June 2014 and June 2016
                                                                                                                        • Where the shift is being felt first
                                                                                                                            • Figure 28: Consumer definitions of luxury of increased significance compared with 2014, by consumers who have bought luxury products in the last 18 months, June 2016
                                                                                                                          • Men and women
                                                                                                                              • Figure 29: Consumer definitions of luxury, by gender and age group, June 2016
                                                                                                                            • The higher income emphasis shift
                                                                                                                                • Figure 30: Consumer definitions of luxury, by monthly household income group, June 2016
                                                                                                                            • Consumers Who Have Bought Luxury Products

                                                                                                                              • Slight decline in luxury purchaser proportion
                                                                                                                                • Figure 31: Consumers who have bought luxury products, June 2014 and June 2016
                                                                                                                                • Figure 32: Consumers who have bought luxury products, by demographics, June 2016
                                                                                                                            • Types of Luxury Products Bought

                                                                                                                              • The ladies’ indulgences
                                                                                                                                • Figure 33: Consumers who have bought luxury products in the last 18 months, June 2016
                                                                                                                              • The decline in the value of time
                                                                                                                                • Figure 34: Consumers who have bought luxury products in the last 18 months, June 2014 and June 2016
                                                                                                                              • Cosmetic inconsistencies
                                                                                                                                • Figure 35: Consumers who have bought luxury cosmetics/fragrances/skincare in the last 18 months, instance above or below the average by city, June 2016
                                                                                                                              • Venus versus Mars
                                                                                                                                • Figure 36: Consumers who have bought luxury products in the last 18 months, by gender and age group, June 2016
                                                                                                                              • Luxury perceptions by sector
                                                                                                                                • Figure 37: Consumers who have bought luxury products in the last 18 months, by consumer perceptions of luxury products (A), June 2016
                                                                                                                                • Figure 38: Consumers who have bought luxury products in the last 18 months, by consumer perceptions of luxury products (B), June 2016
                                                                                                                            • Retail Channels Luxury Products Bought From

                                                                                                                              • Don’t underestimate department stores!
                                                                                                                                • Figure 39: Retail channels luxury products bought from, June 2016
                                                                                                                              • Online and overseas outlets gain
                                                                                                                                • Figure 40: Retail channels luxury products bought from, June 2014 and June 2016
                                                                                                                              • The gender gap not that great
                                                                                                                                • Figure 41: Retail channels luxury products bought from, by gender and age group, June 2016
                                                                                                                              • The income gap significant
                                                                                                                                • Figure 42: Retail channels luxury products bought from, by monthly household income group, June 2016
                                                                                                                              • Brands bought online
                                                                                                                                • Figure 43: Retail channels luxury products bought from online, by consumer luxury brand purchasing, June 2016
                                                                                                                              • Brands bought in China
                                                                                                                                • Figure 44: Retail channels luxury products bought from in China, by consumer luxury brand purchasing, June 2016
                                                                                                                              • Brands bought in another country
                                                                                                                                • Figure 45: Retail channels luxury products bought from in another country, by consumer luxury brand purchasing, June 2016
                                                                                                                            • Consumer Luxury Brand Purchasing

                                                                                                                              • The French connection
                                                                                                                                • Figure 46: Consumer luxury brand purchasing, June 2016
                                                                                                                                • Figure 47: Consumer awareness of selected leading luxury brands, June 2014
                                                                                                                              • Brand awareness-to-sale conversion rate
                                                                                                                                  • Figure 48: Consumer luxury brand purchasing, June 2014 and June 2016
                                                                                                                                • Brand purchasing by gender
                                                                                                                                    • Figure 49: Consumer luxury brand purchasing, by gender and age group, June 2016
                                                                                                                                  • Brand purchasing by income
                                                                                                                                      • Figure 50: Consumer luxury brand purchasing, by monthly household income group, June 2016
                                                                                                                                    • Brand perceptions
                                                                                                                                        • Figure 51: Consumer luxury top-5 brand purchasing, by Consumer perceptions of luxury products, June 2016
                                                                                                                                    • Consumer Perceptions of Luxury Products

                                                                                                                                      • Luxury is still a badge of image…
                                                                                                                                        • Figure 52: Consumer perceptions of luxury products, June 2016
                                                                                                                                      • …but without showing off
                                                                                                                                          • Figure 53: Consumer perceptions of luxury products, June 2014 and June 2016
                                                                                                                                        • Showing off versus being “in-the-know”
                                                                                                                                            • Figure 54: Consumer perceptions of luxury products, by key consumer groups, June 2016
                                                                                                                                          • Luxury perceptions by demographic group
                                                                                                                                              • Figure 55: Consumer perceptions of luxury products, by gender and age group, June 2016
                                                                                                                                          • Consumer Attitudes to Luxury Products

                                                                                                                                            • Individualism and craftsmanship dominate
                                                                                                                                              • Figure 56: Consumer attitudes to luxury products, June 2016
                                                                                                                                            • Craftsmanship, individualism and inner-peace
                                                                                                                                                • Figure 57: Consumer attitudes to luxury products, June 2014 and June 2016
                                                                                                                                              • Attitudes by demographics
                                                                                                                                                  • Figure 58: Consumer attitudes to luxury products, by gender and age group, June 2016
                                                                                                                                              • Key Consumer Groups

                                                                                                                                                • Half of luxury buyers are Status seekers
                                                                                                                                                  • Figure 59: Key consumer groups according to attitudes to luxury products, June 2016
                                                                                                                                                • Status luxury seekers
                                                                                                                                                  • Who they are
                                                                                                                                                    • What they like
                                                                                                                                                      • How to market to them
                                                                                                                                                        • In-the-know lifestyle seekers
                                                                                                                                                          • Who they are
                                                                                                                                                            • What they like
                                                                                                                                                              • How to market to them
                                                                                                                                                                • Luxury doubters
                                                                                                                                                                  • Who they are
                                                                                                                                                                    • What they like
                                                                                                                                                                      • How to market to them
                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                          • Abbreviations
                                                                                                                                                                            • Consumer research methodology
                                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                              • Total luxury retail market value
                                                                                                                                                                                • Figure 60: China – Total domestic market value for luxury retail, 2011-21
                                                                                                                                                                              • Forecast Methodology

                                                                                                                                                                              Companies Covered

                                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                                              Luxury Retailing - China - September 2016

                                                                                                                                                                              £3,170.69 (Excl.Tax)