Hard luxury thrifting is gaining ground in China. Will it last?

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Key takeaways:

• Despite an uplift in high-tier luxury spending, cautious purchasing habits are projected to make a comeback due to macroeconomic factors such as the upcoming US election.
• As more secondhand luxury marketplaces set up shop in China, meaningful long-term purchases come to the fore.
• Prada credits its Q3 sales growth to a renewed focus on the Chinese market and sports.
• Inbound tourism from foreign visitors continues to thrive, while Chinese consumers are increasingly likely to make domestic travel plans.

For the first time in the past year, the third quarter of 2024 saw a decline in China’s lower-tier luxury spend (less than RMB 22,499 or $3,209). While 9 per cent of consumers have fallen out of the lower tier category, both middle tier (between RMB 22,500-52,499 or $3,209-7,488) and higher tier spend (more than RMB 52,500 or $7,488) are on the rise, bucking the trend of the slight but steady decline witnessed in the latter half of 2023 and early 2024.

Higher-tier spending sees particularly strong growth, tracking five percentage points higher than in the second quarter of 2024. However, predictions suggest this growth may wane in the final quarter as macroeconomic factors continue to creep up on consumer confidence. “We remain quite cautious about the short-term outlook for the Chinese luxury market. Although the higher level of high-tier spending could reflect more resilience from VIP or wealthier consumers, we think that overall consumer sentiment should remain low due to the macro uncertainties,” says Carole Madjo, head of European luxury goods research at Barclays.

Uplift in the middle and higher tiers across Q3 is contrary to previous predictions of prolonged conservative spending. In Q2 of this year, just 6 per cent of shoppers expected to spend RMB 52,500 ($7,488). Despite customer caution, improvements in actual spend can be attributed to the likes of the Olympics, which added to the buzz around this year’s summer of sports and consequently aided growth in the luxury activewear space.

While growth in the highest spend category is expected to drop slightly in Q4, predictions see middle and lower tier spending set to grow by two percentage points, respectively. Landmark shopping events in China, such as Singles Day present further growth opportunities as the year draws to a close, with the US election also anticipated to make an impact.

In Q3 2024 the upcoming US election is front of mind, with 43 per cent of respondents concerned about China-US relations. In a super election year, with over 60 countries taking to the booth to vote, the US presidential election on the 5 November is a pinnacle moment in the global political calendar, considering the threat of increased tariffs on Chinese imports, among other changes. Additional macroeconomic factors — such as concern for the economy and job security — have remained relatively stable since the third quarter of 2023.

Photo: Courtesy of Prada

While the global economy awaits election results, consumer confidence rests in the balance. Predictions of cautious spending habits in Q4 come hand in hand with a preference to save and invest. Sixty-seven per cent of consumers had a savings account in Q3, up 10 percentage points year-on-year versus 56.6 per cent in Q3 2023. This increase is even more stark for lower-spend consumers, rising from 58 per cent to 73 per cent year-on-year as frugality sets in.

Chinese travel, meanwhile, has undergone consistent turbulence due to changing priorities around both international and domestic travel. While 61 per cent of consumers plan to spend on international travel in the next 12 months — slightly up from this time last year at 57 per cent — 11 per cent of consumers don’t plan to travel at all in Q3 2024 versus just 2 per cent in Q3 2023.

Domestic travel within Mainland China continues to be the most popular option, while travel within Asia more widely has seen a slight lift in popularity. Travel of Chinese tourists outside of Asia continues to drop dramatically, as inbound tourism from foreign visitors to China rises 152 per cent, in line with visa waivers. This could potentially boost the local tourist economy, fuelling purchases within China.

The power of sports storytelling

While Chanel remains the most-purchased luxury brand in China, Prada has witnessed strong 7 per cent sales growth over the past year, making it the fastest-rising fashion house. In December 2023, Prada chief executive Gianfranco D’Attis set his sights on the Chinese market, and since then, the brand has injected significant investment. Prada’s support of the Chinese women’s national football team and of six-time Olympic table tennis champion Ma Long as brand ambassador underlines the power of sports storytelling, as well as its impact on the luxury sector. Meanwhile, the brand’s use of actor and brand ambassador Li Xian in its recent Qixi — aka Chinese Valentine’s Day — campaign highlights strong ties to local popular culture.

When it comes to stability, the majority of China’s top-purchased brands have retained their popularity since last year, with only Prada seeing growth of more than a couple of percentage points. Chanel and Dior continue their reigns as the country’s two most-purchased brands, with consumers planning to spend the most heavily on each heritage house in the upcoming quarter. Beyond the top 10, the highest risers include hard luxury players Roger Vivier, Omega and Van Cleef Arpels, all rising four percentage points in the past year.

For the first time in the last year, small leather goods are the most-purchased category, with purchase rates increasing five percentage points and overtaking long-standing contenders such as jewellery. However, predictions suggest that jewellery is set to return as most-purchased, as customers intend to spend with prestigious brands and invest in timeless pieces that will continue to hold their value.

While the Olympic and Paralympic Games might be over, sporting fever reached a crescendo in Q3, with brands like New Balance and Dior witnessing an uplift in sportswear purchases. Casual shoes remained the second most-purchased luxury item, as 39 per cent of luxury consumers purchased from the category in the past three months. Across sportswear, brands Nike and Adidas remained top of the market; each had a notable presence at Paris 2024.

In terms of product discovery, social media remains king while upholding its role as a highly cited source of inspiration among all age groups. For 45 to 54-year-olds, multi-brand e-commerce sites ranked highest for new brand and product discovery, used by half of all respondents, underscoring a growing opportunity for brands within retail media despite a tumultuous wholesale landscape.

Pre-loved luxury as an appealing investment

In the past year, 46 per cent of luxury consumers in China have purchased secondhand and/or vintage goods as shoppers increasingly look to invest in items with long histories or unique appeals.

This uptick in demand for vintage and secondhand items intersects with the launch of Vestiaire Collective in Hong Kong. The luxury pre-loved marketplace has utilised artificial intelligence to launch websites in Chinese, Dutch and Swedish, enabling the platform to seamlessly integrate its existing offering into additional geographies. The launch into these markets has been met with a 200 per cent spike in new buyer growth for the platform.

Regardless of the rise in online marketplaces, physical stores remain the consumer’s first port of call when it comes to shopping secondhand. Nonetheless, the sector is consistently evolving its distribution channels, with 26 per cent of consumers purchasing through peers on social media, for example, an equal number to those shopping via auction houses.

Within the secondhand market, jewellery and watches are the most-purchased luxury items; over half of secondhand luxury shoppers (56 per cent) have purchased a timepiece in the last 12 months. More specifically, consumers are looking to the pre-loved category for items that will retain their value. A move that is in keeping with China’s illustrious history of auctioning and its deep collector culture, as well as the more current trend of cautious spending. Forty-one per cent of consumers invest in art, jewellery and luxury goods as part of their investments and saving habits.

Despite the sustainability gains that come with shopping secondhand, exclusivity ranked as the highest reason for consumers to shop pre-loved at 42 per cent. Sustainability ranked in third at 37 per cent, second to an item’s historical value, a factor important for 40 per cent of secondhand customers.

The shift towards secondhand and vintage shopping has been linked to the rise of thoughtful purchasing efforts, whereby consumers look to make more conscious buying decisions. Shoppers are looking for investment pieces to showcase their luxury prowess and increase environmental awareness.

Against this backdrop of caution, the secondhand market creates an opportunity for measured, meaningful spend. The final quarter of 2024 ushers in hope for a more stable macroeconomic environment as a result of the US election outcome, but whether this will restore confidence among Chinese luxury shoppers remains uncertain.

Boilerplate: *Vogue Business surveyed 532 luxury consumers in China, aged 18 to 64 in March 2023, 502 respondents in June 2023, 506 respondents in September 2023 and 506 respondents in December 2023, 503 in March 2024, 500 in June 2024 and 500 in August 2024. Consumers were split by natural fallout across gender and age group (18 to 24, 25 to 34, 35 to 44, 45 to 54, and 55 to 64). Respondents were luxury shoppers with a minimum spend of RMB 1,000 ($142) on a single item or a total spend of RMB 8,500 ($1,211) over the last 12 months. Respondents were asked about their luxury shopping habits, spending and travel, as well as their secondhand purchases. This is the seventh edition of an ongoing quarterly study of Chinese luxury consumers in partnership with Barclays Research.

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