Chinese consumers account for more than a third of the luxury goods sector’s worldwide revenues and are still fuelling growth in the sector in spite of a US-China trade war.
Bain forecast that global sales of luxury handbags, high-end clothing and cosmetics would expand by 4percent to 6percent at constant currencies in 2019 thanks largely to booming Chinese demand, after growing 6percent last year.
But as shopping patterns shift - with fewer Chinese tourists travelling to the US, and Beijing encouraging more domestic spending with VAT and import tariff cuts - a generational overhaul is also gathering pace.
“Gen Z” consumers in their late teens and early twenties are rapidly taking centre stage in China, where according to top luxury labels the average shoppers are already younger than anywhere else in the world.
“They are the ones to watch. They are a huge spending force, they are impulse buyers,” said Federica Levato, a partner at Bain, yesterday.
American and European brands were trying to work out how best to capture the trend with digital marketing campaigns and events that kept up the hype like concerts or temporary pop-up stores, Levato added.
Last month Italy’s Prada, hit as Chinese shoppers begin to spend less in markets like Hong Kong, named 20-year-old singer and actor Cai Xukun as a brand spokesperson in China as it jostles with other labels to capture growth on the mainland.
Millennials in China - the generation born between the mid-1980s and early 1990s, just ahead of “Gen Z” - derived the bulk of their income from their parents, a Bain study from earlier this year showed, as did “Gen Z” shoppers.
The US, another major market for luxury goods players, was still strong despite a first quarter blip linked to shifts in US tax policy and lower rebates, which should be temporary, the consultancy added in its latest report.
Some companies, like jeweller Tiffany, flagged sharp declines in spending among Chinese visitors, which Bain said was the principal fallout from the trade war so far.