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CONSUMER SPENDING
Luxury brands feel pressure as Chinese consumers pare back spending
By our African Marketing Confederation News Team | 2024
Rising cost of living, growing unemployment among young people, and fears of deflation are among the factors worrying Chinese shoppers.
Under-pressure Chinese consumers are becoming increasingly cautious about spending on expensive luxury items.
This is according to Swatch, which has several luxury watch brands in its stable – among them Harry Winston, Longines, Tissot and Breguet.
“They (Chinese consumers) have become even more price sensitive, as there have been excessive price increases in many areas,” Swatch group CEO, Nick Hayek, told the Swiss newspaper Neue Zuercher Zeitung. “I expect the Chinese market to remain difficult until the end of the year.”
The Cloud Nine Mall in Shanghai, China.
Photo: Szalai.laci via Wikipedia
In the last decade or so, Chinese buyers have been a mainstay of global luxury brands, ranging from automobiles to clothing and jewellery.
Factors impacting the market
However, the lingering effects of Covid on the economy and factors such as growing youth unemployment, a struggling property sector, and rising cost of living have all impacted the market.
Deflationary concerns have also led to people choosing to save and invest more, rather than spend on consumer goods.
“The Chinese [still] have money and they continue to show interest and come into [our] businesses. But they currently hesitate for a long time before buying something,” Hayek said.
Other top-end brands that are struggling in China at the moment include Gucci, the Italian fashion and leather goods manufacturer, and LVMH. The latter’s brands include Moët, Hennessy and Louis Vuitton.
However, Hayek remains bullish about long-term prospects in China.
“China’s potential remains great; people are hungry for success, want to work, earn more, go out, travel and certainly buy watches,” he said.
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