Consumer preferences seem to be changing somewhat in China because information has surfaced that reveals the country’s luxury shopping market shrank last year in 2014 and economic growth is beginning to slow in the industry. The consulting firm that has reported this information has been tracking the Chinese market since 2000 and claim that this is somewhat due to the national anti-corruption campaign that has been on the rise in the country. This decline raises some concerns for the luxury goods companies because the Chinese economy as a whole is thriving which means people are normally buying goods and have the money to spend on luxury products, but the interest is just slowly dying.
The second largest luxury goods manufacturer, Richemont, was able to predict since November 2014 that their first half net profit in 2015 would drop 23 perecnt because of this minimizing demand and interest. The main decrease in sales came from mostly men’s products and it all stems from the increased marketing and awareness for the anti corruption campaigns aimed at luxury goods companies.
It is believed that the luxury companies need to start rethinking their advertising and campaigns in a way that will feel fresh and make the people feel like they have to have the products because it will be an improvement and worth having immediately. Many Chinese consumers find better prices in foreign markets and order online or through “daigou” agencies, which are people that purchase the items abroad and send them to customers in China.
Apparently 70 of the Chinese shoppers are getting their luxury brand products from some type of foreign market, which needs to change somehow. Whether it comes from a change in marketing, fresh and unique products, or something else, the companies are going to have to find a solution soon or else they will watch the market continue to decline before their eyes.
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