9 December 2022
Luxury brands are questioning whether continuing price increases in the China market are the right choice. The brands say they are aimed at consumers who don’t have a problem spending, especially those who, being young, do not look in the rear-view mirror at how much the same product cost three years ago.
At present, this strategy may work as Oliver Wyman’s “The New Faces of Chinese Luxury Buyers” report shows that 50% of Chinese fashion and luxury accessories buyers entered the market between October 2020 and September 2021. In other words, they are unaware of the previously charged prices. This year, according to the report, this audience share will drive more than 80% of market growth.
However, the situation in the Chinese market is changing, between the lockdowns, the economic slowdown, and the nationalist trend “guochao”.
Long gone are the days when droves of Chinese tourists would descend on Galeries Lafayette in Paris to buy a Gucci bag and show it off to their friends back home. It just does not have the same kudos to buy the same bag in Shanghai rather than Paris and pay more for it.
Increasing prices at every opportunity may turn out to be counterproductive for luxury brands that depend on China to boost international sales since, at some point, the price elasticity will eventually snap.