Jewelry was one of the strongest categories as China’s luxury market expanded in 2023 following the resurgence of tourism, according to a new report by Bain & Co.
The jewelry segment increased between 15% and 20% last year after the government lifted Covid-19 restrictions and travel resumed, Bain said last week. The fashion and lifestyle category also gained 15% to 20%, leather goods 10% to 15%, and beauty 8%. The watch market saw the softest rebound, up 5% to 10%.
While the growth was strong in 2023 compared to the previous year, which saw sharp declines due to restrictions on travel and extended lockdowns, it has still not returned to the record high of 2021. That disparity is primarily attributable to lower consumer confidence, a slower-than-expected economic recovery, and the return of Chinese consumers to purchasing luxury goods overseas.
Overall, China’s personal luxury sales rose 12% in 2023, Bain noted. The market is set to see mid-single-digit growth in 2024. Part of the issue with the slower market recovery is the pricing gaps between luxury goods in China and other markets. Jewelry is as much as 10% higher on the mainland than overseas, while watches cost up to 5% more.
Sales of jewelry and other luxury goods in Hong Kong fell by more than half in July, according to new figures.
It was the worst affected sector of all, with a year-on-year decline of 53.7 per cent to $328m.
Sales were hit by the ongoing coronavirus pandemic, a two-week quarantine requirement for tourists from mainland China, and continuing anti-government protests.
Figures for the first half of 2020 show revenue from revenue from jewelry, watches, clocks and other valuable gifts was down by 64 per cent to $2.14 bn.
Total retail sales for all sectors were down 23.1 per cent compared with July 2019, at about $3.41bn, according to data released yesterday by the Census and Statistics Department of the Hong Kong Special Administrative Region HKSAR government.
Luk Fook’s same store sales dropped 10% in the third fiscal quarter amid economic weakness in greater China.
The depreciation of the Chinese yuan against the Hong Kong dollar led customers to purchase cheaper products in the three months ending December 31, the retailer said Thursday.
Luk Fook, one of Hong Kong’s largest jewelers, derives a significant proportion of its revenue from tourists visiting the municipality from the mainland. The weakening of the yuan during 2018 reduced the purchasing power of those consumers, causing same store sales at branches open for more than a year to fall 9% year on year in Hong Kong and Macau. Same store sales in mainland China slid 14%.
“The recent market sentiment was adversely impacted by the US China trade war, the depreciation of the yuan , and the downward pressure in the stock and property markets,” the company added.
Same-store gold sales in Hong Kong and Macau dropped 9%, while gem set jewelry purchases fell 8%. The currency effect led to a double digit decline in the average selling price of gem set products, the jeweler noted.
In China, same store sales of gold products plunged 16%, while sales of gem set jewelry decreased 5% for the period.
Luk Fook’s results are for its self operated stores, and exclude licensed shops, which form the majority of its stores on the mainland.
