New service covers both domestic and international brick-and-mortar spending in luxury direct retail made by consumers in China

Shanghai, June 22, 2020 – Continuing its global industry and marketplace expansion, The NPD Group, Inc. today announced the launch of the company’s Chinese Luxury — Direct Retail Tracking, covering both domestic and international brick-and-mortar spending in luxury direct retail made by consumers in China.

Available now, the new service delivers insights on luxury product purchasing down to the brand level. It covers more than 90 luxury brands in 54 cities in mainland China. This service also provides international spending on luxury direct retail by consumers in China for more than 26 countries and regions. Reporting includes insight into spending, transaction counts, share, and growth rate by brand in direct retail channels. 

The NPD Group’s Luxury – Direct Retail Tracking is based on aggregated payment data representing 800 million Chinese consumers. It is available to subscribing clients on a monthly basis, giving them timely access to detail on emerging trends and the ability to react faster to those trends ahead of the competition, . The data can be used to monitor competition and gauge ROI of brands’ marketing campaigns. Beyond this monthly reporting, NPD will be able to conduct custom brand sentiment studies leveraging weekly data down to the city level. This will be useful to companies as they make critical decisions related to store locations and consumer preferences.

Trends in Luxury — Direct Retail

The data shows luxury direct store sales in mainland China increased 23%to (U.S.) $5.6 billion in 2019 compared to (U.S.) $4.6 billion in 2018. The picture has changed in 2020. Due to travel restrictions related to COVID-19, consumers in China are not able to purchase luxury goods overseas, leading to increased consumption of luxury goods in mainland China. Previously, they purchased luxury products in duty free shops and at retailers in other countries while traveling, or in Hong Kong. Those locations are inaccessible now and contribute only limited sales. Purchases of luxury brands now mostly happen inside mainland China, and brands are scrambling to ensure direct retail capitalizes on the resulting opportunities.

When the lockdown began in China on January 25, luxury goods sales declined immediately. This was aggravated by Hong Kong’s closure to visitors from mainland China and other countries’ restrictions on travelers from China during the COVID-19 crisis. Overall spending on luxury goods plunged 92% in February. Direct retail luxury goods sales took a nosedive, declining 78% compared to January in mainland China. In March, as most cities in China gradually reopened, direct retail bounced back. By May, luxury direct retail sales in mainland China had fully recovered — they even hit historic highs for spending. Key brands like Hermes, Louis Vuitton, Chanel, and Richemont were key drivers in this recovery. Even with recent price hikes by some key luxury brands, consumers’ pent-up demand created a spike in purchasing.

“China is an important long-term market for global luxury goods business. The NPD Group’s expansion into this area aligns with what our clients value and have come to expect from us,” said Stanley Kee, Managing Director, APAC, The NPD Group. “As consumer spending power in China increases over the years, pursuing a luxury lifestyle will persist into the future. We are excited to work with our clients as we bring insights about Chinese demand for and spending on luxury goods in mainland China and around the globe.”