Chinese consumers continue to value high-end items, yet they demonstrate a preference for pre-owned luxury products
In the bustling city of Shanghai, Japanese retailer Komehyo Holdings has opened a store that is making waves in the market. The store, equipped with artificial intelligence and expert staff, checks for counterfeits among the stock of used items, catering to a growing demand for authentic secondhand luxury goods.
This trend is notably prominent among China's Gen Z consumers, who face an uncertain job market and are reportedly becoming cautious about spending. According to Zhao Weilin, a senior researcher at Japan's Itochu Research Institute, China's middle class is afraid of spending, a sentiment that is becoming increasingly prominent.
The growing popularity of secondhand luxury goods is linked to a greater emphasis on value in daily shopping habits. Market watchers believe that sales of secondhand luxury goods in China are still low compared to Western countries but have room to grow significantly.
The market for used goods in China is projected to reach RMB 3 trillion (USD 414 billion) in 2025, double the 2022 level, as reported by the China Market Watchers. This rapid growth is also backed by the Institute of Energy, Environment and Economy at Tsinghua University, which states that the market for used goods in China is growing rapidly.
Despite the growth in the used goods market, luxury brand sales in China have been sluggish overall. France's LVMH, the world's largest luxury group, reported a 6% decline in sales for the January-March quarter in the Asia-excluding-Japan market. Kering, a France-based luxury company that owns Gucci, also experienced a 19% decline in retail sales in the same region during the same period.
However, the market for used luxury goods seems to be thriving. Bain & Company reported that Chinese shoppers buy secondhand luxury goods both online and in physical stores. Designer bags from brands like Louis Vuitton and Burberry were on sale for up to 80% off in the shop. A customer in Guangzhou stated that buying new is expensive, and they came to look at secondhand items.
Weiwei Xing, a partner at Bain, stated that "the hurdles to brand consumption in China are getting higher." This could be a factor contributing to the rise in secondhand luxury shopping, as consumers seek affordable alternatives to high-priced luxury goods.
The mainland China luxury goods market was worth RMB 444.7 billion (USD 61.3 billion) in 2023, a 12% increase from 2022 but short of the 2021 record of RMB 456.4 billion (USD 62.9 billion). This suggests that while the market is growing, it is doing so at a slower pace compared to previous years.
In conclusion, the trend of secondhand luxury shopping in China is on the rise, driven by a combination of economic factors and a growing emphasis on value. As the market continues to grow, it will be interesting to see how it impacts the luxury goods industry in China and beyond.
