ingle-digit rate in 2024, following 12 per cent year-on-year growth in 2023. However, the growth trajectory faces challenges, with consumer confidence showing signs of volatility amid broader economic uncertainties and shifting spending patterns. “Industry leaders maintain that the current situation reflects a cyclical downturn rather than a structural change, with the emergence of China’s upper-middle class remaining a powerful long-term driver of luxury consumption,” said Simon Tye, CEO of MDRi. Despite the low confidence in 2024, the forecast reveals a cautiously optimistic picture of luxury consumption. Mainland China is set for continued growth, with 56 per cent of surveyed consumers planning to increase their luxury spending in 2024, driven by confidence in the domestic economy. The country’s Tier 2 and Tier 3 cities are expected to lead growth, showcasing robust spending increases compared to Tier 1 cities, highlighting the expanding influence of emerging urban centers. Five emerging trends in Chinese luxury consumption In the report, MDRi unveiled five key consumer trends expected to take shape China’s luxury sector. 1. The rise of experiential luxury Chinese luxury consumers are increasingly prioritising experiences over products, with different generational preferences emerging. While Millennials (aged 26-35) seek indulgent, memorable moments, Gen Z (aged 21-25) focuses on wellness and self-care. Health activities, luxury travel, and fine dining have become key areas of investment, with 68 per cent of consumers planning to spend more on wellness and fitness, and 60 per cent expressing a preference for luxury spa treatments. In response, brands are encouraged to integrate experiential elements into their offerings, such as partnerships with wellness retreats and bespoke travel experiences. However, the research company said this growing desire for experiential elements does not in any way diminish Chinese customers’ yearning for tangible luxury products. On the contrary, Mainland Chinese luxury consumers continue to acquire high-quality luxury goods, acknowledging that the inherent tangibility of these products cannot be replicated by lifestyle or experiential offerings alone. This multifaceted approach to luxury consumption reflects their evolving aspirations and a profound inclination towards a more enriching and holistic engagement with luxury. 2. The emergence of Sanya Shanghai continues to dominate China’s luxury retail landscape as the primary shopping destination, while Sanya has emerged as a strong competitor thanks to its duty-free policies and strong government backing. 3. National pride and domestic brands A surge in national pride is fueling a preference for domestic luxury brands, with Mainland consumers being particularly drawn to products that incorporate traditional Chinese elements and craftsmanship. Chinese luxury watches and fashion brands are experiencing strong demand, with 73 per cent of respondents showing interest in purchasing domestic watches. To capitalise on this trend, MRDi said international brands should integrate Chinese cultural elements into their designs while emphasising sustainability and craftsmanship to enhance their appeal to the local market. 4. Sustainability and second-hand luxury Sustainability has emerged as a cornerstone of luxury consumption in China, with 85 per cent of consumers considering it a priority. This shift towards mindful consumption is evidenced by growing acceptance of second-hand luxury goods. In response, brands have significant opportunities to implement circular economy initiatives like buy-back programs and second-hand platforms, while maintaining transparency in their sustainability efforts to appeal to increasingly discerning consumers. 5. Integration of technology and AI Technology continues to play a transformative role in luxury consumption. Consumers value AI-driven personalisation and innovative features, with 90 per cent willing to pay for technologically enhanced luxury experiences. AI is being used to tailor recommendations, enhance exclusivity, and improve customer service. Looking ahead According to the report, understanding generational differences is crucial in the luxury market landscape. The younger Gen Z demonstrates a clear preference for experiences that enhance their wellbeing and place significant value on receiving exceptional customer service in their luxury interactions. In contrast, millennials show a stronger inclination towards unique and indulgent experiences, particularly driving the growth in luxury travel and fine dining sectors. This distinct generational divide necessitates a carefully balanced approach from luxury brands, who must develop strategies that can simultaneously appeal to both the wellness-focused Gen Z demographic and the experience-seeking Millennial consumer base. The evolving luxury landscape in China demands innovative and adaptable responses from brands seeking to maintain their market position. Several key strategic imperatives have emerged as essential for success in this dynamic environment. First, brands must develop highly localised approaches that carefully consider and adapt to regional preferences, with particular attention paid to the unique characteristics of Tier 2 and Tier 3 cities. Second, successful luxury brands are increasingly moving beyond traditional product offerings to create comprehensive luxury propositions that seamlessly blend tangible products with immersive experiences. Third, sustainability has become a non-negotiable element of luxury brand strategy, with successful companies embedding environmental consciousness deeply into their brand narratives to align with evolving consumer values. Finally, technological innovation, particularly in AI and digital tools, has become essential for delivering the personalised experiences and service excellence that today’s luxury consumers expect. Further reading: China’s luxury goods fatigue: What should retailers know?