Asia-Pacific Luxury Goods Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Asia-Pacific Luxury Goods Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Asia-Pacific luxury goods market is projected to register a CAGR of 8.72% during the forecast period (2022-2027)

Since the COVID-19 pandemic has forced a major part of the global population to sit at home, owing to travel restrictions and lockdown, the luxury goods industry has been hit hard by the pandemic, especially in this region. However, According to Alibaba, the sales of luxury goods in China increased from 11% to 20% in 2020 as compared to the overall share of the global industry. Government incentives also helped the growth of the market. Chinese authorities distributed coupons to encourage people to shop.

The Asian luxury market is in flux, with consumers demanding luxury goods from different backgrounds and starting points. A steady economy, rapidly changing consumer trends, the growth of boutique luxury brands, and the massive shift from physical to digital channels are creating a new competitive landscape for the luxury goods market.

Younger consumers are helping to drive changes in luxury consumption and attitudes. They are heavily fixated on sustainability, and most of the luxury consumers say they prefer brands that are socially responsible.

Luxury is also becoming more digital. Asia is emerging as a new growth engine for luxury online. Even though only a small portion of the market is sold through online channels, the sales through the channel are growing very rapidly, with accessories and beauty products holding the major share. Online continues to gain share, with customers increasingly influenced and enabled by digital channels, also in their physical purchases. The biggest online channels for luxury sales were e-tailers, brands’ own websites, and retailers’ websites. Strategic decisions to diversify into new business areas are never taken lightly in the luxury goods industry, and competition among players is very strong, intensified by the growth in online shopping. For Instance, Louis Vuitton expanded out from its focus on clothing and bags to open a jewelry house with an online presence.

Spending in China’s market is booming owing to the solid consumer confidence and willingness to buy, especially among young generations. These young consumers are well informed about luxury and eager to embrace innovative trends, such as the convergence of high fashion and sportswear. The Chinese government’s reduction in import duties and stricter controls over gray markets, combined with brands’ efforts to narrow the price gap with overseas markets, have led more Chinese consumers to make their luxury purchases in China. According to a public survey, 46% of people preferred to buy smartphones in 2021, followed by 46% for clothing, 48% for shoes, and 31% for personal computers/laptops. Sustainability and digitalization are also factors augmenting the growth of the market.

The Asia-Pacific luxury goods market is fragmented with the presence of various companies. Emphasis is given to the merger, expansion, acquisition, and partnerships of the companies along with the new product development as a strategy adopted by the leading companies to boost their brand presence among consumers. Players in the market are diversifying their products and are expanding their distribution circles, and they are experimenting through online channels to acquire a competitive edge in the market. Some of the major players in the market are LVMH Moët Hennessy, Chanel SA, Hermès International SA, and Kering SA.

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