SHANGHAI & LONDON & NEW YORK–(BUSINESS WIRE)–Chinese millennials and Generation Z are set to become the dominant driver of luxury consumption over the next decade.
The country’s millennials (born 1985 to 1995) and Generation Z (born after 1995) accounted for 34% of discretionary disposable income in 2015 but this is forecast to rise to 50% by 2025, according to the 2017 Chinese Luxury E-Commerce Whitebook report from Secoo, Asia’s largest high-end e-commerce platform, and Tencent, the largest data company in China.
The report – which leverages Secoo’s unique insight into customers and Tencent’s expertise in big data – found that almost half (48%) of luxury shoppers in China were under 30.
Young generation embrace online
Some 42% of Chinese millennials tend to shop online, compared with 34% of Generation X (born between mid 1960s and early 1980s). The average age is now 25 and, as the desire of young people to shop online shows no abating, this post-90s generation is also becoming another powerful group in luxury consumption.
Minority brands Rise up
This younger generation is highly active using online and social media channels, such as Weibo and WeChat – with digital media accounting for 76% of where they source the latest luxury information and insight, while traditional media only accounts for 24%.
Chinese consumers are stepping up their buying of minority brands – as opposed to famous and high-profile logo – as they seek more personalised and less mainstream experiences. For example, as Hip-Hop culture has gradually become more mainstream this has led to more young people embracing and becoming fans of brands, such as Supreme and Vetements.
Reduced import duties boost China’s domestic consumption
The US remains the biggest market globally accounting for 22% of luxury sales but China is a close second with 21%.
The report also found that growth in the Chinese luxury market is forecast to grow each year by 4% over the next five years to reach of 617 billion RMB in 2021, ahead of growth in the worldwide market.
Key drivers behind this have included the Chinese government introducing policies to stimulate demand for domestic luxury consumption by reducing import duties on categories, such as cosmetics, luggage and apparel.
The 2017 China Luxury E-Commerce Whitebook report follows Secoo reporting strong financial results in 5 consecutive quarters. For the third quarter to 30 September 2017, Secoo’s GMV reached US$209.6 million, representing an increase of 65.4% from Q3 2016. Total net revenue reached US$147.6 million, up 44.2% from Q3 2016.
Secoo has grown rapidly to become Asia’s largest online luxury transaction platform, according to Frost & Sullivan.