PARIS/MILAN (Reuters) – Wealthy Chinese are avoiding flaunting their wealth in favor of more discreet fashion, shows a report published on Tuesday by consultancy Bain, which expects the luxury market to experience its largest bout of weakness since the COVID-19 pandemic.
Global sales of high-end products – clothing, accessories and beauty – should at worst stagnate or at best increase by 4% in 2024 compared to last year, predicts Bain in its biannual report on luxury, closely followed by the sector.
This would be the weakest sales growth since 2020, when the sector was hit by lockdowns linked to the COVID-19 pandemic.
The slowdown is most marked in China, where uncertainty about the economic outlook weighs on the middle class and encourages the wealthiest to remain discreet.
“For the first time in history, we have in China what is called luxury shame,” said Federica Levato, a partner at Bain, pointing to rising unemployment and the economic hardship of many Chinese.
“The market is, without a doubt, in a phase of stagnation,” added Federica Levato. “After two and a half years of growth, we are seeing weariness with personal luxury products.”
This unfavorable context in China is causing major names in the sector such as LVMH and Kering to suffer.
Hermès is the only one of the major luxury houses listed on the stock exchange to have progressed over the past year.
Instead of crowding into malls, shoppers are now going to private meetings and opting for more sober and discreet fashion, rather than “highly visible and flashy items”, says Federica Levato, who predicts, however, that this trend, closely linked to a particular economic situation, may not last.
Signs of recovery have emerged in the United States, driven by demand from wealthier customers, while younger, less affluent customers continue to delay purchases.
In Europe and Japan, the return of foreign visitors has boosted sales of luxury goods.
(Report by Mimosa Spencer and Elisa Anzolin; French version Diana Mandiá, edited by Blandine Hénault)
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