Pricing luxury in China

• The Chinese government has eased Covid restrictions, and Chinese tourists are expected to flock to Europe to shop. However, the shift towards domestic luxury shopping might change the game.
• Considering period price hikes for luxury goods, the iconic Gucci Horsebit 1955 has exhibited a 14% and 15% price increase on European and Chinese markets, respectively.
• Within Asia, Japan holds the lowest price point regarding luxury handbags, on average 20% lower than in the Chinese market.

Designer bags are essential to fashion brands as they can stand as a luxury brand’s most distinguishable symbol. According to the Business of Fashion Insights report, global consumer spending in the leather goods category grew to $72 billion in 2022 and is expected to reach $100 billion by 2027. This growth will occur mainly in the US and China, the two largest markets for designers’ large and small leather goods.

The Chinese government lifted its zero-covid policy in early December, thus relaxing strict travel restrictions. Known for their luxury spending overseas, Chinese tourists are once again allowed to travel to global shopping hubs such as Paris, Milan, or London. However, in light of inflation and the energy crisis disrupting the Western economy, should we expect a shift in favor of domestic spending?

Valentino also had its share of iconic moments, most notably the Pink PP Fall/Winter 2022 collection, where Pierpaolo Piccioli used a single shade of hot pink across the entire assortment.

During his tenure, Alessandro Michele became known for the maximalism of GUCCI’s collections. According to Retviews’ data, GUCCI used 23% fewer neutral colors such as black, grey, beige and white than Valentino. The brand’s ready-to-wear assortment was characterized by bold colors, graphic prints and extravagant styles.

Maximalism, defined by bold prints, bright colors, layered silhouettes and strong visual statements, became a key part of GUCCI’s identity under Michele. Collections such as Fall/Winter 2020 and Spring/Summer 2020 showcased vibrant colors, mixed textures, florals, embroidery and geometric patterns.

In fact, GUCCI offers on average 95% more extravagant clothing than Prada and Bottega Veneta, both of which have adopted a more minimalist and classic approach in recent seasons.

As China luxury sales are expected to grow between 25% and 35% this year, European luxury houses are investing heavily in China. During Covid restrictions, mainland consumers had to look towards domestic stores to answer their luxury needs, and more specifically the tax-free island of Hainan. In 2021, Hainan accounted for 13% of China's domestic luxury spend, versus 6% pre-pandemic, and tax regulations are set to continue to loosen.

So, the real question is whether luxury shopping tourism towards Europe will eventually resume and come back to what it used to be before the pandemic? Where Chinese shoppers were buying 70% of their luxury goods abroad, experts claim that it will eventually become an even 50-50. As travel restrictions are lifted, destinations such as Hong Kong, South Korea and Japan are top international destinations for Chinese shoppers. So, what does that mean for luxury brands?

Looking at the state of international prices within the luxury sector, Retviews’ data show that high-end luxury players are maintaining a lower price point in Japan than in China. Aside from several brand-specific exceptions, China remains the most expensive Asian market for luxury leather goods. The prominence of the Chinese market and its generally high price point begs the question of whether domestic purchases will continue to stand out, and if we will see luxury brands adapt pricing strategies accordingly? Will other Asian markets gain traction instead?

Chinese shoppers continue to favor luxury shopping in Europe, thanks to a broader assortment of designer goods and access to the latest fashion trends. Beyond pricing, assortment variety remains a key factor influencing purchasing decisions.

Retviews’ data show that luxury brands have significantly increased their investment in China. Gucci now offers nearly three times more leather goods in China than in France, while Louis Vuitton carries 19% more leather goods in the Chinese market.

Meanwhile, Japan has become an attractive luxury destination due to its lower prices, although its assortment remains smaller, with 14% fewer handbags available than in France.

These trends highlight the importance of data-driven international pricing and assortment strategies. Retviews enables brands to analyze competitors, optimize positioning, and make faster data-driven decisions.

The Lunar New Year celebration is a significant event in Chinese culture, and luxury brands have recognized the importance of this occasion for their Chinese clientele. As Chinese shoppers prepare to return to Europe, luxury brands have made strategic investments in Lunar New Year-themed collections that feature animal zodiac items, often presented in a red color symbolizing good luck, happiness, and prosperity.

Year of the rabbit collections have been popping up along numerous luxury brands, and Retviews’ real-time data show the difference in pricing strategies between leading luxury brands Loewe and Burberry. Taking a closer look at the pricing structure behind the collection, Loewe’s assortment covers a wider price range than Burberry, thus catering to a slightly larger audience, with a lower entry-level price and a 24% higher maximum price than Burberry’s.

Considering the current economic shift, understanding the best way to target each international market is critical for fashion brands. Discover how Retviews, the leading competitive intelligence platform for fashion can help your brand optimize pricing strategies across markets and nail your assortment on an international scale. Don’t miss out on the real-time data that fashion’s leading brands are using to stay ahead of the game.