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LuxePulse Fashion China: Retail Exceeds Pre-Covid, Events Industry Booms and Gen Z Gets Conservative

LuxePulse by Gusto Intelligence is a quarterly market analysis of beauty, fashion and hospitality industries, available on an annual subscription of USD 1,400. The latest Q3 2020 LuxePulse Fashion provides a market scan of new retail activity, influencer and celebrity collaborations, reports from outside agencies, market trend analysis and more.

This excerpt looks at Luxury and fashion in China in 2020 so far:

Economic rebound

Since experiencing a 6.8% contraction in the first quarter of 2020, China’s economy has been gradually rebounding from the coronavirus crisis. The nation’s Gross Domestic Product (GDP) growth has returned to positive, with an increase of 3.2% in the second quarter. However, looking at the first half of 2020, GDP has declined 1.6% year-on-year. For full year 2020, China is forecasted to be the only G20 country to experience positive growth at 1% compared to -4.9% globally.

Consumer retail sales posted positive growth in August of 0.5% year-on-year. This marks an end to the negative growth trend kicked off by COVID-19. Nevertheless, in the first half of the year, retail sales reached RMB17,225 billion, an 11.4% year-on-year decrease.

Online retail sales, however, grew 7.3% year-on-year during the first half of 2020 to RMB5,150 billion as people resorted to e-commerce over offline retail stores.

Luxury’s dramatic upwards trend

The luxury sector has also seen a quick reversal in retail sales in China. While the rest of the world is still experiencing declining sales, many luxury brands have reported a ‘dramatic upwards’ trend in China.

The global luxury industry shrank around 25% in the first half of 2020, according to Bain & Company. Luxury conglomerate LVMH reported a double-digit decrease globally, yet in China saw 65% year-on-year growth in the second quarter of 2020. The Kering Group reported more than 40% growth since the first quarter this year.

Offline retail exceeds pre-Covid levels

Offline is rapidly becoming busier once again. In terms of offline retail foot traffic, Savills has reported that footfall in its high-end shopping malls in three of China’s top cities has returned to, or exceeded, pre-pandemic levels.

Various brands, including Dior, Gucci and Hermès, have had to limit the number of customers in their  Shanghai IFC Mall stores, not due to COVID-19, but to allow for a sufficiently intimate shopping experience.

Large scale events are back to business as usual

Offline events are also starting to resume. The China Beauty Expo 2020 was held 9-11 July in Shanghai, one of the first large-scale events since COVID-19 put events of all sizes on hold. Also in July, Dior held the Designer of Dream exhibition, which was attended by around 700 visitors.

In August, Louis Vuitton presented its Men’s Spring-Summer 2021 collection in Shanghai to approximately 1,500 guests. The high-end shopping mall Xintiandi Plaza in Shanghai is planning to host World Music Asia, an 8-day music gala across 7 locations and 37 bands offline in early October 2020.

Autonomous trend

As Chinese consumers acclimatize to the new post-COVID-19 world, some trends appear to be here to stay. Autonomous retail, for example, which first emerged in 2016 with unstaffed stores, vending machines, and unstaffed shelves, has experienced a re-emergence due to COVID-19.

The number of autonomous retail businesses grew by 40% between January and May this year. The sector has more than doubled in four years and is expected to cater to more than 200 million customers by 2022.

Convervatism and old traditions popular

Another trend we have observed is the rising conservatism among Chinese youth. Compared to their millennial peers, Generation Z has experienced a true luxury boom with a tightening of cultural control.

The younger consumer apparently perceives more progressive values, such as women’s and LGBTQ rights are a betrayal of Chinese culture.

On Douyin, for example, a hashtag ‘Praying for Boy Baby’ (in Chinese) has amassed over 500 million mentions as new mothers of boys give their blessings to mothers-to-be, with fervent hope the newborn will be male.

Find case studies, news on campaigns and offline events, social media and influencer happenings, sources and references in the full report

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‌‌The Luxury Conversation is a platform curated by Gusto Collective for luxury professionals to connect, share and discuss Asia’s luxury industry and its rapidly evolving affluent consumers.

Gusto Collective is Asia’s leading Brand Technology group – delivering best-in-class storytelling and immersive experiences powered by the latest technology. Gusto is a leader in determining the future of next-gen customer experiences that are increasingly operating within the spheres of AR/VR, the metaverse, NFTs and Web3. The company was founded in January 2020 by technology and marketing veteran Aaron Lau, a renowned business leader. It offers four core service specialisms: luxury brand management, a VR/AR experience platform, Web3 turnkey solutions and a metahuman marketing platform. Gusto Collective employs more than 170 full-time “Gustodians” across four offices in Hong Kong, Shanghai, Tokyo and London.  

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