Foreign News
Chinese Consumers Swap Luxury Bags For Premium Skincare
Chinese consumers are increasingly choosing premium skincare over designer handbags as a prolonged property downturn and weak consumer confidence reshape spending habits in the world’s second-largest economy.
Industry analysts say aspirational middle-class shoppers are no longer abandoning luxury altogether. Instead, they are prioritising prestige beauty products that offer a more affordable way to indulge in premium brands.
Beauty Outperforms Luxury Goods
Luxury skincare, make-up and fragrances are outperforming traditional luxury categories such as handbags and leather goods.
Beauty companies including Estée Lauder and L’Oréal have reported stronger sales of premium skincare products in China this year, while luxury fashion houses such as Hermès and LVMH have described demand as largely flat.
Analysts say consumers are willing to spend on products they view as self-care or long-term personal investment while delaying expensive discretionary purchases.
Consumers Becoming More Selective
According to consultancy Oliver Wyman, 37% of affluent Chinese consumers plan to increase spending on prestige beauty over the next year, compared with only 4% who intend to spend more on leather goods.
Experts say skincare products are easier to justify because they are relatively affordable and require regular replacement, unlike luxury handbags that can easily be postponed.
Luxury Brands Feel The Pressure
L’Oréal said China remained the biggest contributor to growth in its North Asia business, with its luxury division growing 10% in the country.
Estée Lauder also expects prestige beauty demand in China to strengthen further during the current financial year.
Luxury fashion brands, however, continue to face headwinds.
LVMH said spending by Chinese consumers remained broadly flat in the first half of the year, while Gucci owner Kering reported another decline in China sales.
Hermès also said it had not seen any meaningful recovery in demand, describing the market as stable rather than improving.
A Permanent Shift?
Analysts believe the slowdown reflects more than temporary economic weakness.
They argue younger Chinese consumers are becoming less interested in buying luxury products purely for their logos and status.
Consultants say many shoppers have moved from the “You Only Live Once” (YOLO) approach to luxury spending to a more cautious “You Only Need One” (YONO) mindset, making purchases more selective and value-driven.
(with inputs from Reuters)