The new trends in the fashion sector in China
A saleswoman of 26 years old who represents the new face of the Chinese luxury consumer. She wears a Burberry coats, a blue Valentino bag and reads magazines like Vogue before trying to replicate the newest styles and observe what famous people are wearing.
While women have dominated luxury shopping during a long time, they’re just now catching up with men in China, who had greater purchasing power. Companies like Chanel, Vuitton or Burberry are stepping up to meet demand from the apparition of new “fashion addicts”.
“Its a rebalancing of the consumption between females and men,” said Mario Ortelli, a analyst at Sanford C. Bernstein. “Women are today more independent, richer, and can buy products for themselves.”
Men accounted for 90% of China’s high-end purchases in 1995. Women now make up about half. That trails the global average in various markets, where female consumers account for about two-thirds.
The apparition of fashion addicts
“Luxury buying by Chinese women is driven by jobs and peer pressure,” said Yan, whose collection also includes bags from Louis Vuitton and Saint Laurent Paris. “These are items we’ve eyed in the past and now are able to afford. We also see friends around us carrying these things.”
A growing group of “fashion addicts” in China will continue to fuel the trend toward women’s high-end apparel. These are Chinese consumers, mostly female, middle-income professionals in larger cities such as Shanghai, Beijing, and Guangzhou.
The fashion addicts are well informed and looking to stand out from the crowd. They are a lot more into fashion than accessories, bags or watches.
Entering in a new era
Spending on expensive menswear and watches both fell in China last year. Nevertheless, demand for women’s wear, cosmetics and perfume increased of 10%, making them the fastest-growing categories in China’s luxury-goods industry.
“Nobody expects any changes to government policy,” Lannes said of China. “That’s why it is the beginning of a new era, and brands have to rebase their business.”
The future of the sector
Although Chinese customers are the world’s biggest luxury buyers, accounting for 29% of high-end purchases, mainland sales have slowed as Chinese shoppers now buy more than two-thirds of their items overseas.
Prices are between 30 to 4% lower in Europe and as much as 25% lower in Hong Kong.
Chanel’s black leather bag is sold for 35 200 yuan in China, while it is sold for 2 950 euros, or 24 400 yuan, in Paris.
Refocusing on women’s fashion can help luxury-goods makers counter the overseas-buying trend.
Gross profit margins are at least 10% points lower than those for leather goods. Diversification is a good thing to revive interest and drive sales. It’s obviously less positive in terms of margins and returns on investment.
With apparel and shoes, brands have to carry different sizes and need more space to display them, Rambourg said. Apparel retailers also tend to hold sales at the end of a season, he said.
Shoppers like Carry Zhuang, a 32-year-old who works in the media industry in Shanghai, are grabbing companies attention as a way to overcome the slowdown.
“We earn our own money”, said Zhuang, dressed in a black blouse and carrying a Ferragamo leather bag, while shopping in the city’s IFC Mall, home to luxury stores from Chanel to watch retailer IWC. “And we want to spend it on something we like.”
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