Literature Review
Although recent and continuous economic challenges are starting to undermine the market and consumer optimism in certain places, executives in the worldwide fashion business are cautiously hopeful about the year to come. According to the consulting firm McKinsey & Company (2022), global fashion earnings are projected to increase as customers increasingly release their spending power and upgrade their outfits as social life resumes in several important markets across the world. Favorable customer mood is on the rise, particularly in areas with high rates of saving. In the case of growing sales in the fashion industry, the most interesting part is the high demand in Chinese markets in the modern state of economy. McKinsey & Company (2022) assert that greater consumer expenditure growth possibilities exist in China, where growing incomes are expected to lead to a rise in consumer spending of $10 trillion between the years of 2021 and 2030. The luxury and non-luxury categories of the Chinese fashion industry have already returned to their pre-Covid sales volumes and will probably continue to increase.
Among the most successful handbag brands, several can be mentioned, such as Chanel, Gucci, Louis Vuitton, Prada, and Dior. O’Connor (2022) wrote in Reuters, a financial news agency, that with domestic sales tripling in only six years, China is poised to surpass the US as the greatest market for premium handbags worldwide, despite economic challenges. As per account of a consulting firm, Bain & Co., the nation had 21% of the global market for private luxury items in 2017, behind North America and Europe (Hall and Aloisi, 2022). By 2025, it is anticipated to overtake all other markets (Hall and Aloisi, 2022). The 400 million-strong emerging middle class in China, which has long been anticipated, is undoubtedly feeling the effects of the present epidemic and yet contributes to the growth of fashion industry (Hall and Aloisi, 2022). As a result, the luxury fashion indutrly, which includes handbag segment, is believed to grow with a growing demand of middle class.
When delving deeper into the handbag rapid sales growth in China, other credible sources provide their perspective. According to Wang’s article in Vogue (2022), customers in China are currently considering the long-term investment potential of luxury products when making purchases, indicating the emergence of a new regional brand hierarchy. The emergence of luxury marketplaces in China is altering how consumers, especially elderly luxury consumers, purchase. When investment comes first, perceptions of quality, performance, and workmanship also alter (Wang, 2022). This has ramifications for firms trying to recover lost sales, especially at this time, when the lockdowns in Shanghai and Beijing are ending and revenge shopping is anticipated to start (Wang, 2022). Therefore, consumers in China boost the handbag sales due to the value of such luxury items.
Rationale
The matter of growing sales in the luxury fashion industry segments in China must be of particular interest due to current economic challenges around the world, including reviving regional pandemics, supply chain disruptions, recessions, and other issues. The general state of the economy in China is still one of decline given the present COVID and lockdown policies. Luxury fashion segments, such as handbag brands, however, flourish in this setting. The given trend of a growing demand might indicate that as a way to protect one’s finances from inflations. Many people of middle class and upper-middle class consider purchasing luxury handbags as their haven and investment tools.
In this sense, the given project considers handbag sales in China and the factors that contribute to their continual increase in 2022. In the first section of the project, overall fashion industry mood is discussed with emphasis on the Chinese markets. Slow revival of economies in post-pandemic times are considered, while focusing on the predominance of success in China and how the earnings of luxury handbags still increase. The project additionally provides an overview of the leading position of Asian consumer demand in comparison with the Western counterparts. Although the economic state of the preferred country does not seem to be in the best position, the project still provides estimates regarding the future revenues and the reasons behind such growing tendencies, focusing on the customer overview. Lastly, out of all luxury fashion segments, the project offers an analysis of the factors, which make the handbag industry desirable and successful in contemporary economic state.
As a result, the given project will provide a comprehensive overview of the importance of consumer preferences and how they can shift in undesirable economic conditions. The case of handbags in Chinese markets in 2022 illustrates the driving forces of increasing demand and, therefore, rapidly growing sales of the handbag companies. In the end, it becomes obvious, that overall consumer investing strategies and the influence of previous economic predicaments have an effect on the customer base, which is constituted of both affluent and middle-class representatives in China. Still, considering that many developed countries of the West could show similar trends, China is still the leading market in terms of luxury items, which could additionally be due to cultural tendencies.
Reference List
Hall, Casey & Silvia Aloisi. (2022) ‘Big brands fret over China as middle-class spurns luxury’, Reuters. Web.
McKinsey & Company. (2022) ‘The state of fashion 2022’, McKinsey. Web.
O’Connor, Tamison. (2022) ‘The outlook for China’s $15 billion handbag market”, BoF. Web.
Wang, Junjie. (2022) ‘As luxury resale catches on in China, investment buying is on the rise’, Vogue. Web.