Whether luxury companies can offset that largely U.S. slump will depend on how China's recovery in domestic and tourist demand unfolds over the rest of this year, analysts say.Luxury executives have been banking on China's comeback to push the industry as a whole into positive territory in 2023 - likely around 5% according to Bain estimates - though some brands, such as Hermes and Chanel, will fare better than others.
In China, jewellery is emerging as the most in-demand product category, outpacing casual shoes, leather goods and clothing, with watches also seeing strong sales, consultants say. As for accessories and clothing, Chanel, Dior and Balenciaga saw the highest increases in purchases in the most recent quarter.
But rising unemployment among the younger generation - China's youth jobless rate climbed to 21.3% in June from 20.8% in May, a new record high - could spell trouble in recruiting new consumers, within luxury's top-tier brands and outside. But according to HSBC's Erwan Rambourg, one silver lining of the pandemic has been that European luxury brands have started to pay more attention to local clienteles, potentially making them less vulnerable to China risks than in 2019.