As the Digital Luxury Report 2020 recently released by the Boston Consulting Group and Tencent Marketing Insight pointed out, the share of online purchases in the Chinese luxury market — which has benefitted from successful domestic pandemic control — is up 20 to 30 percent year over year. Conversely, the American and European markets are down 25 to 45 percent over that same period.
The main reason for that growth may be attributable to the decline of global travel, making Chinese customers with strong purchasing power shift back to domestic shopping, said Judy Liu, Managing Director-Greater China, Farfetch. In addition, shopping, to some extent, helps people find psychological comfort and relief. The digital channel for luxury brands is no longer a ‘nice to have’ but a ‘must have. Another takeaway from this year’s Shanghai Fashion Week is 2020 will be a good year for independent Chinese designers and domestic brick-and-mortar stores due to lack of foreign competition.
More than 20 select shops have opened in Shanghai alone over the past few months, while new boutique shops in Hangzhou are as big as 600 square meters. More domestic growth is predicted to take place in China’s smaller cities. According to the China Luxury Forecast — a report from Ruder Finn & Consumer Search Group, luxury consumers in lower-tier Chinese cities have shown strong purchasing power, and are poised to become the engine for future growth – outstripping consumers in first- and second-tier cities.