Analysis Of China'S Luxury Market Consumption In 2018

　　 The global luxury market in 2018 is about 347 billion dollars

According to the World Clothing, Shoes and Hats Network, in 2018 luxury goods The market size is about 347 billion dollars. Although the global economic slowdown, sudden political events, Sino US trade war and other factors affect the global luxury market It still recorded a growth of 12%, including e-commerce business, advanced customization business, and traditional high-end niche that has begun to revitalize in the past two years brand Business growth. In 2018, Chinese people's luxury shopping reached nearly trillion yuan, and online luxury sales soared. Millennials are not the future of luxury brands

　　 In 2018, Chinese people bought US $145.7 billion in luxury goods, 74% of which were purchased overseas

According to the statistical data of the Forecast and Analysis Report on Market Demand and Investment in China's Luxury Industry released by the Prospective Industry Research Institute, the global luxury consumption of Chinese people in 2018 reached $145.7 billion, an increase of 7%, accounting for 42% of the global luxury market. Among them, overseas luxury consumption reached US $107.3 billion, up 4%; The total domestic consumption is 38.4 billion US dollars, with a growth rate of 17%. The consumption outflow is still very serious, and 74% of luxury purchases occur outside China. How to let the high net worth people consume back is the key point to stimulate domestic demand, boost the domestic consumption market and promote quality consumption.

　　 Statistics and growth of global luxury consumption of Chinese people from 2011 to 2018

Data source: sorted by Prospective Industry Research Institute

　　 Statistics and growth of Chinese overseas luxury consumption from 2011 to 2018

Data source: sorted by Prospective Industry Research Institute

　　 Statistics and growth of luxury consumption in China from 2011 to 2018

Data source: sorted by Prospective Industry Research Institute

　　 Analysis of China's luxury market consumption in 2018

The share of China's domestic luxury market in the global luxury market has increased to 11%, an increase of one percentage point over 2017. The consumption of China's market has shown an obvious trend of recovery. However, due to the downturn in the housing market, the bad stock market, the increase in unemployment and other reasons, the consumer confidence of China's consumers has been seriously affected. The luxury consumption power has weakened significantly since the second half of 2018.

At present, the luxury purchasing power of Chinese consumers is mainly concentrated in more than 10 million asset consumers, and more than 4 million Chinese "VIP customers" (short for asset customers above 10 million), accounting for 3% of the population, contributed 60% of the global luxury consumption of Chinese people in 2018, totaling 87.4 billion dollars. Chinese VIP customers prefer overseas shopping. In 2018, they consumed more than 75 billion dollars of luxury goods outside China, accounting for 70% of Chinese consumers' overseas luxury goods consumption, and purchased about 12.4 billion dollars of luxury goods in China, accounting for 32% of the domestic luxury goods consumption market. Therefore, how to make the consumption of high net worth people return is the most critical point to stimulate domestic demand, boost the domestic consumption market and promote quality consumption.

Although Chinese consumers will remain the dominant force in the global luxury market for a long time in the future, the brand pattern of the luxury industry in the future will change to the trend of multi polarization of brands due to the diversification and personalization of consumption. The relative advantages of traditional luxury brands and luxury groups still exist, but the market share will be impacted to some extent. International large-scale Internet platforms, e-commerce platforms such as Alibaba and Amazon, and social platforms such as Facebook and Tencent will also directly participate in or control a certain number of luxury brands. With the help of the huge Chinese consumer market, Chinese capital will also become an important force in the global luxury market, and mergers and acquisitions and integration between luxury groups will also intensify.

　　 In 2018, online sales of luxury goods reached 36 billion yuan, an increase of 37% over 2017

According to the survey of 2750 VIP customers in 2018, the proportion of high-end consumers willing to buy luxury goods online has increased from 4% in 2013 to 27%. The main concerns of online shopping are still fake goods (79%), experience (43%) and services (27%). It is predicted that with the increasingly standardized Internet shopping environment, the popularity of various official online sales channels for luxury brands, especially the rise of various membership based luxury shopping models, will greatly solve the problem of trust, and the proportion of people willing to buy luxury goods online will rise to more than 80% in 3-5 years.

In 2018, the online sales turnover of luxury goods in China reached a record $5.3 billion, about 36 billion, an increase of about 37% over the $3.9 billion in 2017. The development is very rapid, accounting for nearly 14% of the sales of luxury goods in China.

The report predicts that 2019 will be a year of explosive growth of luxury e-commerce, and the country will introduce various incentive policies for luxury e-commerce. It is estimated that the market capacity of China's luxury online consumption in 2019 will have the opportunity to exceed 50 billion.

With the rise of online consumption of luxury goods, how to get through online and offline, to enhance the sense of trust and experience online, and to enhance the convenience and multi selectivity online and offline has become a new topic for many brands. In 2018, nearly 90% of luxury brands tried to store the Internet, mainly focusing on online release of new products, appointment to store, release activities, etc. By the end of 2018, more than 400 stores of more than 90 first-line brands had settled in the luxury third-party VIP customer service platform.

In 2018, the opening and closing of global luxury brands will be carried out at the same time worldwide, while the opening of stores will be concentrated in new markets and emerging cities where the brand has not set foot, and the closing of stores will be concentrated in mature markets and economically developed cities. It is predicted that from 2019, "one store in one city" will become the store expansion strategy of many brands, that is, one city will close redundant stores and establish a super large flagship experience center, which is not only a product display and exhibition center, but also a customization center, an activity center, and a customer service center, Such stores can cooperate with online customers to establish more dimensional and closer customer relationships, and achieve multi frequency and multi angle interaction with customers.

According to the analysis of the report, the Internet and AI will indeed completely reconstruct the luxury retail format in the future, but big data will become the main driving force for the new retail reform of luxury goods, and will provide high-quality solutions for industrial upgrading based on consumption upgrading. Experience scenarios will be migrated from offline to online based on AI and other technologies, and gradually realize an online based experience mode. The boundaries between online and offline will become increasingly unclear. In the future, new retail will be a multi-dimensional and multi scenario retail model that transcends time and space based on big data and by means of the Internet and AI.

At present, more and more luxury brands are deployed in the Chinese market and quickly seize the young market in order to cultivate potential customers. It is predicted that the development of all luxury brands will significantly slow down in 2019, and Chinese consumers will continue to dominate global luxury consumption. With the help of capital integration and the Internet platform, it is expected that Chinese consumers' domestic luxury consumption will exceed overseas consumption in about 5-10 years.

　　 Millennials are not the future of luxury brands

The report divides luxury consumers into core consumers, marginal consumers and potential consumers.

Core consumers refer to those who have a certain wealth base, regard luxury goods as necessities of life, and have strong luxury consumption ability. At present, there are more than 4 million such customers in China, with assets of more than 10 million. This group contributes about 60% of the luxury market consumption, and has a specific name of "VIP". VIP groups will continue to be the dominant force in the luxury market for a long time to come.

Marginal consumers refer to those who have a certain consumption capacity, but luxury goods are still luxury goods for them. This group has more than 70 million people in China. They may buy one or several luxury goods a year, or they may not buy one luxury goods for several years. We are used to calling this group "middle class". In fact, they are still quite far away from the international standard of middle class. With the intensification of China's "de middle class" process, a small number of this group will become the core consumers of luxury brands through entrepreneurship and other means, and most will face the dilemma of sharply decreasing consumption power, become inactive marginal consumers, or fall into the list of potential luxury consumers.

The potential consumers of luxury goods refer to those who are unable to consume luxury goods, or those who consume luxury goods are a burden and pressure for them, but this does not mean that they are absolutely impossible to purchase luxury goods.

In recent years, the loss of core consumers is a huge pressure faced by almost all luxury brands, By acquiring three marginal customers and potential customers to maintain sales growth, it seems that the number of customers is increasing, but the sales have not decreased. In fact, the brand is facing huge risks, because the core consumers have a clear demonstration role for the other two types of consumers.

However, most of the millennial consumers with high expectations from luxury brands are marginal consumers. They are large in number, flexible in mind, have ideas, are easy to accept new things, and dare to consume ahead of time. However, several points cannot be ignored:

1. Most of the millennials are the standard old gnawing people in economically developed cities, and they do not have strong wealth creation ability;

2. At present, China's millennials are generally debt ridden, and various micro credit loans involve almost every millennial;

3. Housing loan, car loan and children's education have become the three mountains of the millennial generation;

4. Most of the Millennials are wage earners. Under the impact of the Internet and AI, most of them will face the risk of unemployment;

5. Millennials are good at spending, but not good at managing money. Millennials have little savings, even if the amount of savings is small;

6. Millennials are easy to accept new things and new brands, but their loyalty is not high;

7. Although the millennials are keen on luxury goods, they are price sensitive.

To sum up, the consumption capacity of the Millennials is not sustainable, and their customers do not belong to a certain brand. They are extremely disloyal, and there is a huge risk in betting on the Millennials. The report believes that the Millennials are likely to become the Beat Generation, and the Millennials are not the future of luxury brands.

At present, all luxury brands face two choices in terms of customer positioning. One is to continue to maintain the high profile of luxury goods, targeting a small number of important customers. One is to actively or passively popularize and become popular high-end consumer goods. The first is to do business with a small number of people, with a large market share. The second is to do business with a large number of people, but with a small share. Each has its advantages and disadvantages. However, the risk of the latter is that with the gradual platformization of various industries and the further development of artificial intelligence, it will become an indisputable fact that most people will lose their jobs. At this time, the consumption power of mass consumers will be further reduced, and their luxury consumption power will also be further exhausted.

　　 Forecast of Six Trends in Global Luxury Industry in 2019

1. The upsurge of luxury brand sales and acquisitions is coming. In 2019, there will be a wave of large-scale brand mergers and acquisitions. Several major luxury groups may merge with each other. The world-famous Internet platforms will actively participate in the investment and mergers and acquisitions of luxury groups or luxury brands.

2. From 2019, the development of all luxury brands will significantly slow down, the brand premium ability will further reduce, customer loyalty will further reduce, product innovation will become the core competitiveness of all brands, and the product R&D budget of all brands will significantly increase.

3. High end niche new lifestyle brands will have a huge opportunity to rapidly expand globally and seize the market share of traditional luxury brands with the help of the Internet platform.

4. The product gap and price gap between traditional luxury brands and popular brands will be further narrowed, and the era of luxury brand popularity will come.

5. Chinese consumers will continue to dominate global luxury consumption, and China's local luxury consumption market will grow rapidly. With the help of capital integration and the Internet platform, it is expected that Chinese consumers' local luxury consumption will exceed overseas consumption in about 5-10 years.

6. The myth of fast fashion brands is broken, and the scenery is no longer good. Except for some brands that can continue to develop relying on product advantages, most fast fashion brands will enter the large-scale store closing mode, and face a large-scale loss of customers.

　　 Analysis of six opportunities in China's luxury market in 2019

1. In order to stimulate domestic demand, the Chinese government encourages medium and high-end consumption, imports and the development of Chinese brands.

2. A large number of high-end niche brands seek various opportunities to enter the Chinese market and serve Chinese consumers.

3. There is huge space for commercial development of Chinese traditional culture and traditional crafts.

4. New retail and platform customization give Chinese brands a chance to successfully counter attack.

5. There is huge market space in the areas not covered by luxury brand stores, especially in the third and fourth tier cities.

6. China's early entrepreneurs, the rich generation, are about to enter the pension mode, and the elderly luxury market deserves attention.

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