China's Middle Class Makes Room for Second-Hand Luxury
Affordable Luxury: Handbag Sold for Just 27 Euros
In the face of China's economic downturn, citizens are turning to luxury items at bargain prices, thanks to the booming second-hand market. The new normal in China is tightening belts, and that's also impacting the luxury market.
Take Mandy Li, an employee at an energy company in China, for example. She used to splurge on luxury handbags but now opts for second-hand ones. With her salary slashed by 10% and her family's property losing half its value, Mandy is cutting back. "I'm saving on big expenses," she admits, while browsing luxury items at Beijing's newly opened second-hand store, Super Zhuanzhuan.
China's economy is taking a hit, and consumer behavior is shifting as a result. Persistent overproduction and sluggish consumer spending are pushing prices down, causing concern among Chinese politicians. Consumer prices are only dropping slightly — they fell by 0.1% in May compared to the previous year — but price wars are rampant across various sectors, from cars and e-commerce to coffee.
Economists predict that China will face deflation for the next few years. Restaurants now offer entire breakfast menus for less than 0.40 euros, and supermarkets host flash sales, sometimes four times a day. However, experts caution that these price wars could lead to business closures, increased unemployment, and further deflation.
Competition among second-hand luxury sellers is on the rise, drawing penny-pinchers like Mandy. Discounts once around 30 to 40% have skyrocketed to 70% and more on large second-hand platforms like Xianyu, Feiyu, Ponhu, and Plum. Lisa Zhang of Daxue Consulting, a market research firm, noticed that more luxury consumers are flocking to the second-hand market. Sellers, in turn, are offering deeper discounts due to increased competition.
At Super Zhuanzhuan, a green Christie handbag from Coach, originally priced at 397 euros, can be found for 27 euros. A G-Cube necklace from Givenchy, originally 397 euros, is available for 22 euros. But some sellers are struggling with a stable demand from buyers outside major cities like Shanghai and Beijing, leading to fears that many of the newly-opened businesses may not survive.
Professor Riley Chang, browsing the store not to buy but to sell her own collection, expressed her dissatisfaction with the offers. "I've been to several large second-hand luxury stores across Beijing and Shanghai, and they all keep prices extremely low," she says.
The second-hand luxury market in China isn't just surviving — it's thriving. In a challenging economy, it's providing a means for consumers to indulge in luxury goods at affordable prices.
Insights:
- Consumer sensitivity to prices, economic conditions, the rise of digital platforms, a growing interest in sustainable and affordable luxury consumption, and increased competition are key factors driving the growth of China's second-hand luxury market.
- The second-hand luxury market creates employment opportunities, influences consumer spending, shapes luxury brand strategies, and helps diversify the luxury goods sector.
- While the second-hand luxury market offers bargains for consumers, it also poses risks for luxury brands due to lower pricing and potential dilution of brand value.
- In the wake of China's economic downturn, the employment policy of second-hand luxury stores is experiencing significant growth, providing opportunities for individuals like Mandy Li, as they seek affordable luxury items, such as those found at Super Zhuanzhuan.
- As the finance sector grapples with deflation and businesses face closure due to price wars, the lifestyle of consumers is shifting towards cost-effective luxury purchases, impacting business strategies, and influencing the employment policy within the second-hand luxury market.
