The young Chinese are to be the strong drivers of the sale of domestic and global luxury goods because of strong consumer confidence and willingness to purchase, according to a report by Bain & Company, a global management consulting firm.
Bain & Company and Italian luxury goods manufacturers' industry foundation Fondazione Altagamma released a report showing that the global personal luxury products market will likely rise between 4 to 6 percent in 2019 and the young Chinese are its major contributor.
This expected growth at constant exchange rates is between 271 billion euros to 276 billion euros.
Bruno Lannes, a partner with Bain & Company said that China might continue its dominance in the global luxury market because Chinese consumers prefer luxury goods bought in the mainland because of price adjustments coupled with consumer-centered strategies and government initiatives.
Likewise, China is in a shift from an export-and investment-led growth model toward something similar to a modern consumer economy and this could be greatly affecting the buying behavior of its young market.
The Bain & Company report also showed that the young generation has purchase willingness and robust consumer confidence that drive the year-on-year market growth of 18 to 20 percent at the constant Chinese exchange rate.
Because of these factors, China's Generation Z, or those born after the late 1990s, will become one of the major factors that will shape the future of the global luxury market.
Studies of the impact of the young Chinese on the luxury market had been a phenomenon. The 2017 Deloitte research paper "Bling It On. What Makes A Millennial Spend More?" shows 40.6 percent of the young Chinese don't mind paying a premium for a personalized product.
Even a previous report from the Bain & Company management consulting firm said that sale on luxury goods went up 20 percent in China in 2018, which accounts for one-third of its global sale.
Forecast on luxury goods' sales of leather and jewelry is to keep steady growth, with the sale of handbags picking up. On the other hand, sale of skin-care and make-up products will be offset by a "mild" performance in fragrances.
Claudia D'Arpizio, a partner with Bain & Company and lead author of the recent study commented, "Overall we are seeing moderate growth in most markets."
Though digital channels are on the rise and they will be bringing in a quarter of the global market value by 2025, still, by that year, more than 45 percent of the global market will be Chinese customers and half of their luxury purchases will be from the Chinese mainland.
By then, the global market is estimated to be between 320 billion to 365 billion euros.
