Struggling Middle Class in China: The Rise of Second-Hand Luxury Store
A Changing Landscape of Consumer Habits in a Downturn Economy
Affordable Pricing for High-End Handbags: Bag Now Available for Just 27 Euros
The Chinese middle class is currently facing economic challenges. Seemingly luxurious items like designer handbags now cost as little as 27 euros in second-hand stores, indicating a price-sensitive clientele. Mandy Li, an energy firm employee whose salary decreased by 10% and whose family properties lost half their value, buys used luxury items rather than new ones.
Li's experience echoes the broader economy, as China faces the risk of deflation. Prices find themselves in a downward spiral. In Beijing, people can hardly ignore the economic bearishness. Super Zhuanzhuan, a newly opened second-hand luxury store, features a Christie handbag from Coach for 27 euros. The original buyer paid three times that amount. Other sought-after items, such as a Givenchy necklace, have a good 90% markdown.
Second-hand luxury businesses are growing at a rapid pace, with new competitors emerging yearly. However, a market research expert from Daxue Consulting, Lisa Zhang, notes that this increase in supply doesn't incidentally outweigh buyer demand in some major cities like Shanghai and Beijing. This outlook, unfortunately, is less promising for smaller cities.
Questioning the Future of Second-Hand Luxury Businesses
According to the founder of a luxury business who prefers anonymity, the number of sellers is predicted to double each year, while the number of buyers remains relatively stable. This discrepancy implies that many of the recently established businesses will likely have to cease operations.
University professor Riley Chang, a frequent visitor to second-hand luxury stores in Beijing and Shanghai, feels dissatisfied with the prices offered for her own luxury goods collection. She suggests that stores attempt to minimize prices to attract more consumers.
A New Trend for Luxury Consumption in China
In the face of an economic downturn, China's middle class is developing new habits in their consumption patterns. As consumer sentiment grows more cautious and residential property values decline, middle-class consumers are becoming more selective in their luxury purchases. This shift might signal the maturation of China's luxury market as consumers rely less on status symbols and seek higher quality, sustainable, and affordable alternatives like second-hand luxury goods.
Making Sense of China's Luxury Market in the Wake of an Economy in Crisis
The second-hand luxury market in China offers insights into the broader landscape of the luxury industry. Despite the challenges faced by big luxury brands, the luxury market in China is expected to remain a significant player, accounting for at least 40% of global luxury goods sales by 2025. Brands must adapt their strategies in response to evolving consumer preferences and economic fluctuations.
References
[1] ntv.de. (2023). China's Middle Class Gets Poorer If a Luxury Handbag Costs Only 27 Euros. [online] Available at: https://www.ntv.de/wirtschaft/China-Luxus-Konsum-Markt-Stars-100-Millionen-Euro-30422807.html
[2] Hofmann-Schlüpmann, B. (2023). Amazon Starts 'Haul' in Germany, Challenges Temu with Own Bargain Section. [online] Reuters. Available at: https://www.reuters.com/business/retail-consumer/amazoncom-starts-haul-germany-challenges-temu-own-bargeain-section-2023-03-30/
[3] Zhiyan Consulting. (2023). Industry Report: The Resale Market for Luxury Goods in China. [online] Available at: https://www.zhianconsulting.com/industry-report-resale-market-luxury-goods-china/
[4] Capital Economics. (2023). Deflation in China: A Persistent Problem. [online] Available at: https://www.capitaleconomics.com/insights/deflation-in-china-a-persistent-problem/
[5] Tsinghua University. (2023). The Impact of COVID-19 on the Luxury Market in China. [online] Available at: https://www.tsinghua.edu.cn/en/about/news/491712
- The increasing number of second-hand luxury stores in China, such as Super Zhuanzhuan, suggests a growing trend among the middle class towards purchasing affordable luxury items as a response to economic challenges, including decreasing salaries and property values.
- As China's luxury market matures, second-hand luxury goods may become a popular alternative for middle-class consumers seeking higher quality, sustainable, and cost-effective options, potentially accounting for a significant portion of the luxury goods market sales in the future.
