2014 中国奢侈品市场研究.docxVIP

2014 China Luxury Market Study Priming brands for redefinition Jan 20, 2015 This information is confidential and was prepared by Bain Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent Key trends observed in 2014 The 2014 luxury market was slightly down from 2013 by ~1% at ~115B RMB, impacted most by slowdown in watches, men’s wear and leather goods. Fundamental “rebasing” as customers evolve and shop for themselves and focus more on acquiring ready-to-wear goods. 1 2 3 4 5 6 Customer segments no longer clear-cut with common behaviors observed across demographic groups—increased diversity of preferred brands, and exclusivity, quality and value for money without logos becoming increasingly important. As a result, shifts are occurring among top brands across categories. Like-for-like sales struggled the most, prompting conservative network expansion and increased focus on revamping core store networks. At the same time, changes in choice of purchasing channel and location have evolved significantly; Daigou sales (parallel purchase) estimated at ~55B to 75B RMB, and travel to Japan and Korea growing ~60%. In this environment, exclusivity and fashion have been the “winners” of the year—limited editions, fashion-focused portfolio and designer collaborations drove growth despite market headwinds. Outlook for 2015: “Rebasing” likely is finished, but conservative growth expectations span categories as brands look to revitalize core networks and cater to more luxury products and experience-savvy customers. 2 This information is confidential and was prepared by Bain Company solely for the use of our client; it is not to be relied on by any 3rd party without Bains prior written consent 1 Overall Mainland China luxury market contracted slightly by ~1% to be 115B RMB ? First time China market has not grown—fundamental “rebasing” - Continued impact of anti-corruption and frugality campaigns undermining “luxu