Chinese consumers contributed almost two thirds of global growth in luxury spending in 2020, according to The NPD Group’s Chinese Luxury Direct Retail Tracking report.
Chinese luxury consumer spending in the direct retail channel totaled $12.29bn worldwide and $9.83bn in mainland China in 2020.
Pandemic-related international travel restrictions have seen Chinese consumers shift spend to the domestic market. Chinese consumers’ spending on personal luxury goods around the world dropped by 26% in 2020. However, Chinese luxury transaction value in mainland China reached 80% of the global total last year, increasing from 43% in 2019. This has seen luxury brands put more focus on the market in China, notes NPD. Luxury conglomerates led the growth in the country: The top five luxury brands recorded $5.1bn in sales in 2020, taking 52% of the total value sales in mainland China.
In mainland China, COVID-19’s greatest impact was in February 2020, when transaction value dropped by 79%. However, the market quickly recovered, reporting double-digit growth in April 2020 and each following month throughout the year.
Duty-free sales in the Chinese island of Hainan have been the beneficiary of travel restrictions. Sales at Haitang Bay in Hainan, the largest standalone duty-free shopping complex in the world, grew by 66% in 2020 compared to 2019. However, consumer spending in Hong Kong, Macau and Taiwan dropped as travel to these destinations was limited.
The NPD Group APAC managing director Stanley Kee said: “In 2020, China’s GDP grew 2.3%; it was the only one of the world’s major economies that registered growth. China’s GDP per capita reached $10,000+ in 2019; 2020’s data release confirmed its steadiness. 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. The world is predicting this focus will increase and strengthen.”