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The inquisitive marvel of revenge buying in China post lockdown
- 18th Jun 2020
With the easing lockdown in China, shoppers have finally started to hit the luxury stores, giving the luxury merchandise industry trust that recuperation from the coronavirus pandemic is in transit.
The shopping propensity is low in numerous downturn scarred economies; this will make the road tough for leading luxury brands. As a result of the pandemic-caused recession the brands are withstanding a harming, overall hit to their worldwide sales this year.
As China is coming out from weeks of shutdown, there is a rising trend of “revenge buying” is being noticed there, as a result the demand of luxury goods in China is currently pent-up. Several leading luxury brands are reporting a growth in their sales figure, which remained slumped for several weeks.
Tiffany & Co is the first company to report that their sales in China have bounced by 30% during April and about 90% in May. CEO Alessandro Bogliolo said, “Our business performance in mainland China, which was the first market impacted by the virus, is indicative that a robust recovery is underway”.
Other brands have reported similar pent-up demand situation for their products, as Burberry reported their sales of bags, cloths and accessories in the last month in China to be more than that of the previous year and this figure is continuing to grow. Similarly, Swiss Watchmaking and jewelry giant, Richemont has reported a strong demand for their products in China, they are also considering the Chinese market as a bright spot for their business, since they have re-started their 462 boutiques in China.
The above data is an indicator of the recovery mode of Chinese luxury market. The overall Chinese market has fared significantly well from May.
Chinese clients might be spending more cash on products at home since they can't travel abroad right now due to the persisting effect of the virus and majority of the world is still dealing with the on-going pandemic, even though 66% of sales from Chinese customers ordinarily occur outside China, as per experts. As per Fflur Roberts, head of luxury goods research at Euromonitor, on Chinese revenge buying behavior, “Instead of going on a holiday, they might buy a Chanel bag.”
It is very important for the Chinese market to bounce back because they account for almost 35% of the overall world-wide luxury sales, and it is expected that five years down the line this 35% might increase to about 50%.
Although luxury market is doing well in the Chinese market, the main reason is ‘revenge buying’, and this is just a temporary phenomenon, this effect might not last for too long.
The uncertainty in the luxury market can only be revoked when tourism starts and only this can bring the market into normality, but this will take many months.