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Why the big shoppers are buying luxury at home

The global luxury industry is worried, as Chinese consumers are looking inwards when it comes to purchasing luxury goods

Shoppers in Shanghai, China (Bloomberg)

By Team Lounge

LAST PUBLISHED 04.05.2023  |  06:39 PM IST

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China’s big consumers are back to shopping. But in the covid era, they prefer to shop at home, rather than fly to other countries.  

According to a Bloomberg report, 62% of luxury spending by Chinese consumers took place inside its borders in April, increasing from 41% in the same month in 2019. Those are the sales figures compiled by alternative data provider Sandalwood Advisors.


Though Chinese tourists are slowly traveling abroad again, analysts surveyed by Bloomberg say the share of their shopping taking place overseas won’t be returning to its heyday. Domestic luxury offerings have grown in sophistication and range, while the prices of goods are rising around the world, hindering Chinese shoppers’ enthusiasm for leaving home, states the Bloomberg report.

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China was the world’s fastest-growing source of tourists before covid, with the majority of their luxury spending, about 70%, taking place outside the mainland in 2019. Shopping and vacation havens from Thailand to Italy have been anxiously awaiting their return, states the Bloomberg report.

“A significant portion of consumption power will stay in the domestic market due to the ease and convenience," said Prudence Lai, senior analyst at market research provider Euromonitor International. The retail market in Asian destinations popular with Chinese shoppers “will see a flatter recovery trajectory and take longer to recover back to pre-Covid levels compared to other travel industries," she added, and “should consider exploring alternative source markets and diversify their customer base for growth", according to the Bloomberg report.

“The local market inside mainland China should from now on represent more than 50% of the total Chinese spending," said Jonathan Siboni, founder and CEO of Paris-based data intelligence firm Luxurynsight. 

With the increase in spending at home, some luxury brands are focusing on investing in the region. LVMH, the world’s top luxury conglomerate, for instance, is shifting resources out of Hong Kong and focusing more investment in mainland cities including Shanghai and Shenzhen, Bloomberg reported last month. 

Going forward, “we expect a higher mix of local spending versus pre-Covid," said Agnes Xu, Sandalwood’s co-founder and head of research, “as luxury is now more accessible in mainland China through years of store expansion nationwide and in Hainan." 


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