Inflation and a rising cost\u002Dof\u002Dliving are hitting discretionary incomes of young consumers especially hard.
Executives are troubled in particular by a hit to young Chinese shoppers, not only because mainland China has been a major driver of the industry’s growth in recent years, but also because high end consumers in the world’s second-largest economy are a decade younger than the global average of 38.
“In the U.S., inflation is a huge issue, the major focus of a lot of luxury companies … In China, it’s the youth unemployment rate that’s alarming right now,” Kenneth Chow, principal at consultancy Oliver Wyman said. A recent Oliver Wyman study showed that some luxury brands are significantly lowering their sales expectations for the Chinese market in response to current conditions, with 80% of executives questioned not expecting a “v-shaped” recovery this year. Oliver Wyman declined to name the brands it surveyed.Article content
“As the prices are rising, I’m becoming more and more cautious because I feel like I did do a good amount of spending in the last year,” said Sara Yogi, a 26-year-old San Francisco, California resident, adding that she may hold off buying a $2,900 Prada bag and one costing $3,200 from Bottega Veneta which are both on her wish list.Article content
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