Chinese shoppers prefer skincare over bags

Chinese consumers are redirecting luxury spending toward prestige skincare and away from designer handbags, according to reporting published August 5 by Inside Retail Asia and corroborated by recent company earnings and consultancy research. Reuters reported on August 4 that a prolonged property downturn and weaker consumer confidence are making price tags more decisive even for premium purchases. Beauty groups including L’Oréal and Estée Lauder have reported stronger sales in higher-end beauty lines in mainland China this year, while luxury groups tied to leather goods have described demand as flat to only slightly firmer. (money.usnews.com) ### Why are skincare products holding up better than handbags? Reuters reported on August 4 that prestige skincare, makeup and fragrance are benefiting because they offer a lower-ticket way to buy into premium brands than handbags do. Kenneth Chow, a principal at Oliver Wyman, said skincare is “lower-ticket, frequently replenished, and easily justified as self-care and ‘self-investment,’” while leather goods are high-ticket, discretionary purchases that are easier to postpone. Jacques Roizen, co-founder of Shanghai-based Foresight Performance Partners, told Reuters that the aspirational Chinese consumer “has not traded down.” Instead, he said, she has “moved to the top of a category she can comfortably afford, instead of the bottom of one she cannot.” (money.usnews.com) ### How big is the gap in spending intent? Oliver Wyman and the Tax Free World Association found a wide split between prestige beauty and leather goods among affluent Chinese consumers. Reuters said 37% of respondents planned to spend more on prestige beauty over the next year, compared with 4% who said the same for leather goods. (money.usnews.com) Bain & Company said in a January 28 report that beauty was the strongest performer in China’s personal luxury market in 2025, while fashion outperformed leather goods and bags. Bain said the mainland Chinese personal luxury market contracted 3% to 5% in 2025 after a steeper 17% to 19% decline in 2024, with consumers becoming more selective and prioritizing value-driven purchases. (money.usnews.com) ### What are the big beauty companies seeing in China? L’Oréal CEO Nicolas Hieronimus said last week that the company’s luxury and dermatological skincare brands are growing at around 7% in China, faster than in recent quarters. Reuters said some of L’Oréal’s top-end brands, including Lancôme and Helena Rubinstein, are doing even better. (money.usnews.com) Estée Lauder said on May 1 that organic sales in mainland China grew at a high single-digit rate in the first nine months of fiscal 2026, helping it gain share in prestige beauty. The company said that performance was led by fragrance and supported by its position in the mainland market. (bain.com) ### What does this say about China’s luxury consumer now? Jonathan Yan, a Shanghai-based partner at Roland Berger, told Reuters that younger consumers are less attached to luxury brands as status symbols and that brands need something beyond logo and craftsmanship to resonate. Bain said Chinese consumers in 2025 were becoming more cautious, more knowledgeable and more selective, with stronger interest in items that balanced quality, exclusivity and practicality. (money.usnews.com) Bain also said experience-based consumption, including travel and wellness, continued to hold up, adding to pressure on traditional discretionary categories. That backdrop helps explain why prestige beauty, which sits between daily-use product and premium indulgence, is proving more resilient than bags. (elcompanies.com) That is an inference from the spending and category data. ### What should brands be watching next? L’Oréal has already pointed investors to faster growth in China beauty, and Estée Lauder has said mainland China remains a share-gain market for prestige products. The next test will come through second-half 2026 earnings commentary from global luxury and beauty groups, particularly whether handbag demand improves or prestige skincare continues to outpace it in mainland China. (money.usnews.com) (bain.com)