With China the first economy to make a swift recovery from the health crisis, luxury brands are increasingly targeting this buoyant market. “Luxury companies have never placed such a focus on China's market as they did in 2020,” says Chinese Luxury Direct Retail Tracking, a new report from The NPD Group.
China’s GDP grew 2.3% in 2020, making it the only major economy in the world to register growth during the period. And brand-conscious consumers who appreciate craftsmanship and the return on investment for big-ticket items, such as watches and jewelry are fueling demand for luxury goods in country, according to The NPD Group’s Chinese Luxury Direct Retail Tracking report.
In the direct retail channel (brick-and-mortar), Chinese luxury consumer spending reached $9.83bn in mainland China and $12.29bn worldwide in 2020, according to NPD. The top-five luxury brands did $5.1bn in sales in mainland China last year, or 52% of the total value sales.
Chinese consumers contributed almost two-thirds of global growth in luxury spending in 2020. As a result of switching their spending to mainland China in light of international travel restrictions, Chinese consumers’ spending on personal luxury goods globally declined 26%. Conversely, their luxury transaction value in mainland China accounted for 80% of the global total in 2020, up from 43% in 2019.
“These numbers indicate great potential for a total consumer spending increase in a society where consumers demand more, better, and newer goods in general. There has never been a year when luxury companies have placed such a focus on China's market as they did in 2020,” commented Stanley Kee, Managing Director APAC, The NPD Group.