Luxury is benefiting from the appetite among younger millennial and Gen Z Asian shoppers who are increasingly spending their money online on Dior gowns and Louis Vuitton bags amid inability to travel to the expensive luxury emporiums of Paris and Milan due to Covid-19.
If evidence were needed of how far China has moved beyond the pandemic, perhaps the strongest was the scene at Christian Dior's fall fashion show earlier this week in Shanghai.
The show's 750 guests lined the catwalk inside the Long Museum West Bund to watch models strutting to disco tunes, one in a sequin jumpsuit, another in a bright pink dress. Most held up smart phones to film the women's ready-to-wear collection by Dior Creative Director Maria Grazia Chiuri, which was live-streamed around the world. Those inside were not even wearing masks.
Asia has been a lifeline for luxury companies like Dior parent LVMH, thanks to its quick exit of the strictest lockdowns that have bogged down Europe and to a lesser extent the US in the past year. As the first of the major fashion houses to report first-quarter results, LVMH posted sales growth on Tuesday that smashed analysts' estimates, driven largely by demand from the region.
After recovering from a steep downturn in 2020, luxury is benefiting in particular from the appetite among younger millennial and Gen Z Asian shoppers for high-end shoes and handbags.
And those shoppers are increasingly spending their money at home and online, rather than travelling to the expensive luxury emporiums of Paris and Milan as they would have done pre-pandemic.
"It does seem this sector is Covid-proof," said Andrew Shipilov, professor of strategy at French business school Insead. Luxury is "still the sector that people spend money on when they cannot spend on travel. It is one of the winners of the pandemic era."
The luxury goods market in China grew 48% last year as travel disruptions boosted domestic spending, according to a December report from Bain & Co.
The consultancy expects this growth will forge ahead, putting the country on track to claim the biggest share of the market by 2025.
LVMH, which also owns Louis Vuitton, derived almost half of its revenue from the region in the first quarter, and sales from Asia excluding Japan surged a staggering 86% on an organic basis. That was followed by the US, which grew 23%. In Europe, where countries are struggling to control renewed outbreaks, the picture remained gloomy, with sales down 9% from the same period last year.
With catwalks having gone virtual for most of the past year in the dominant fashion capitals like Paris or Milan, Dior and Vuitton have tried to entice customers by showcasing collections in sumptuous locales such as the Chateau de Versailles through Instagram and other platforms.
"The appetite of the Asian customer is driven partially by their inability to travel to Europe," Shipilov said. "They still want to signal their love for luxury and their appreciation for European cultural heritage; this is how they are trying to stand out."