CHINA DAILY | HONG KONG EDITION Thursday, February 18, 2021 | 15 BUSINESSFOCUS China’s luxury goods market bucks global trend
Fiscal policies, higher purchasing power of young shoppers, digitalization and dutyfree enterprises boost prospects
By HE WEI in Shanghai 20. They tend to value “the pursuit [email protected] of fashion” as purchase impulses, favor crossbrand collaborations Due to the novel coronavirus pan and use only digital channels to demic, the luxury market last year research brands. inevitably encountered a slowdown. For Belli, omnichannel penetra But the Chinese market has sur tion is definitely key to providing faced as a bright spot. important means for reaching and After an understandably rocky appealing to both a broader and a start, China’s luxury goods market younger audience. Efforts include finished out 2020 with double and social digital platforms such as even tripledigit growth rates for WeChat’s mini program, which sup some brands. ports information searching and Bucking global forecasts of a 23 order placement. percent drop in the luxury market, “We are also committed to includ the country is forecast by consultan ing new technological innovations cy Bain & Co to enjoy a robust 48 which include augmented reality percent growth in luxury spending technology which echoes with the in 2020, totaling almost 346 billion digital savvy luxury clients in Chi yuan ($53.5 billion). na,” she said. Such trends have nearly doubled Digitalization efforts are also pay China’s share of global luxury goods ing off for British luxury brand Bur from 11 percent to 20 percent, and berry. The Chinese mainland will put it on path to become the big excelled versus other markets in gest market worldwide by 2025, leading fullprice sales growth in the even after the global luxury market triple digits on digital channels, the returns to preCOVID19 levels. company said in its latest quarterly Bruno Lannes, a partner at Bain, report in December. attributed such robustness to fiscal Fullprice sales in the fourth quar policies, growing purchasing power ter increased at an even stronger of younger shoppers, ongoing digi pace and strengthened over the pri talization and dutyfree enterprises or quarter, which was driven by both in Hainan province. new and existing customers while “China’s luxury market has expe markdowns were materially lower. rienced increasing repatriation Last summer, the brand opened since 2015 thanks to a reduction in the firstofitskind social retail import duties, stricter control over Above: Consumers pass a store in Shenzhen, Guangdong gray markets and brand price har Chaumet store in Hong Kong. province, claiming to blend physical monization (between China and Chaumet is a luxury jewelry and social worlds with a suite of dig overseas),” Lannes said. brand based in Paris. ital technologies powered by Chi “With the addition of COVID19 YANG JINYAN / FOR CHINA DAILY nese internet giant Tencent. related travel restrictions, the Chi Left: Customers select luxury Through a dedicated mini pro nese mainland’s portion of Chinese cosmetics at a duty free gram backed by WeChat, Tencent’s global luxury purchases last year shopping mall in Haikou, iconic messaging app, customers reached a peak of about 70 percent Hainan province, on Jan 31. can unlock exclusive content on the to 75 percent.” SU BIKUN / FOR CHINA DAILY brand and personalized experien Increased wealth, driven by capi ces, and then share them with their tal gains and the government’s communities. encouragement of shopping, also Josie Zhang, president of Burber played a part. ry China, said that with the younger Plaza 66, a highend shopping Chinese consumers Gen Z consumers shaping up to be mall located on West Nanjing Road the backbone for luxury brands, in Shanghai, held an invitationonly are very sophisticated “their desire for socializing, interac yearend shopping extravaganza and open minded. tion and sharing is propelling us to offering luxury spenders an exclu delve into the realm of social retail”. sive experience. They are looking for At the end of the day, dividends of Dubbed “Home to Luxury”, the newness, uniqueness lockdowndriven repatriation will event only invited socalled Very inevitably diminish as Chinese luxu Important Person consumers whose and exclusivity. Their rygood consumers begin to travel spending amount at the mall com attention focuses on again in 2022 or 2023, said Lannes plex reached a certain threshold from Bain. But he believed brands during the past year, the company brands that are will have at least one year and possi said in a statement. A number of distinctive.” bly two to woo shoppers and con brands from Bottega Veneta, Chau vince their consumers that domestic met to Gucci unveiled some 100 new Sabina Belli , CEO of shopping is a better, more sustaina Pomellato Group products or limitededition items to ble experience. attract the attention of noveltyseek The Bain study found that nearly ing and deeppocketed buyers. important cities in the world … and for the company, as local consumers jewels to be suitable for everyday the Chinese market. Bain found that threequarters of existing consum Customers were able to skip tradi Plaza 66 hosts the most prestigious and their mindsets are fastchang wear, and allows the combination of China’s Generation Z consumers ers in the millennials and Gen Z tional long lines seen at luxury bou luxury brands from the world,” she ing demand expanding to different understatement and playfulness (born after 1995 and making up demographics have said they will tiques and were pampered with a said. “Despite the pandemic, China products. with sophistication. about 80 million people) are now an increase or maintain their luxury number of treats, interactive game has resumed a relatively normal and “Chinese consumers are very “So we have … a lot of confidence emerging source of market growth spending this year. plays and personalized services. almost dynamic environment for sophisticated and open minded. to appeal to Chinese looking for an in their own right, as well as possess “Also, we believe Chinese luxury Riding such a boom, Italian luxu those to continue experiencing luxury They are looking for newness, alternative Italian brand, authentic, ing a powerful influence on consumers’ online shopping behav ry jewelry brand Pomellato Group without needing to travel overseas.” uniqueness and exclusivity. Their genuine and a distinctive position increased digitalization. ior has permanently changed. Near opened its third store in Shanghai’s Offering a bevy of iconic pendants attention focuses on brands that are ing,” Belli added. A joint survey by Bain and Aliba ly 40 percent said they plan to Plaza 66 in December, a move the and rings, Belli recognized Pomella distinctive,” she said. This constant thirst for novelty in ba’s retail marketplaces Tmall and increase their share of online luxury group’s CEO Sabina Belli called to as a “relatively young brand and Belli noted that compared with luxury items could be better under Taobao suggests that surveyed Gen shopping over the next few years, “strategic”. later entrant to this market”. traditionally conservative luxury stood through the unique composi Z respondents typically make their and another 40 percent will main “Shanghai is one of the most But that also means opportunities jewelry, the brand allows precious tion of luxury spending profiles in first luxury purchase at the age of tain their share,” Lannes said.
out that many people were restrict Outlet plazas make waves in retail sector ed from traveling due to COVID19, while outlet plazas have multifunc Many highend tions including shopping, dining By LIU YUKUN and even picnics as many are locat [email protected] brands have very ed in suburban areas and have strict rules on the become a popular choice of enter If there is one thing everyone tainment. loves, it’s a good deal. number and category The outlet market in China start That’s why outlet plazas, or facto of products that go to ed booming years ago. From 2002 ry outlets in China survived and outlet stores to protect to 2010, the average annual growth even boomed amid the COVID19 rate of the number of newly opened pandemic last year, while most brand value ...” outlets was 8 percent, while the stores and shopping malls across growth rate for 20112015 was 17 Neil Wang, president of the country struggled through hard Frost & Sullivan China percent. As of March 2019, the total times. number of outlet plazas in China According to data from out reached 189, according to data letscn.com, a total of 39 outlet plaz many of their products are either released from the China Outlets as have seen their sales surpass 1 outdated or in clearance. Wang said Industry Development Forum. billion yuan ($154.9 million) each the business model has extended A report from outletscn.com said in 2020, while the number for 2019 the distribution chain and relieved that the industry has developed was 34. Total sales from these 39 manufacturers from the pressures rapidly in recent years. It said a outlet plazas across China exceed A view of the outlet plaza in Florentia Village, Chongqing, on Feb of overstocking. majority of outlets in firsttier cities ed 80 billion yuan last year, up from 3. PROVIDED TO CHINA DAILY “Many highend brands have are owned or operated by leading over 70 billion yuan from the 34 very strict rules on the number and companies and the market in those outlet plazas in 2019. category of products that go to out cities is approaching saturation. Bailian Outlets Plaza, located in National Day holiday. “It seems that restaurants, which make it a good let stores to protect brand value, so Hence, industry leaders are actively Qingpu district, Shanghai, topped fewer people think of social distanc choice to kill time with friends.” it is often the case that their outlets seeking more business opportuni the list with annual sales of 4.65 bil ing when seeing new products on According to a report on news stores have very limited products,” ties in secondtier cities. lion yuan. It was followed by Flor shelves with lowerthanexpected website Jiemian.com, high quality Wang said. “The industry is also facing chal entia Village (Beijing and Tianjin) prices.” goods and lower prices are an But since the COVID19 pandem lenges from the boom of online whose sales were 4.3 billion yuan, Liu said she visited outlet plazas important reason outlet plazas ic caused a severe impact on the shopping and crossborder ecom and Capital Outlets in Beijing even more often than previously. “I have been attracting consumers. overall global retail market, many merce, which also offer good dis whose sales stood at 3.5 billion observed there are a lot more prod Neil Wang, president of consult global sports and fashion brands counts and are convenient for yuan. ucts in the stores, some of which ancy Frost & Sullivan China, said have seen increasing stocks and put shoppers. Going forward, outlet Liu Ronghuan, a frequent shop were even trending in the season, that outlet plazas, are brickand more products on sale in their out plazas may consider inviting more per to outlets in Beijing, said she was which is an important attraction mortar venues in which manufac let stores, according to the Jiemian domestic brands, targeting various surprised to see an outlet plaza for me. In addition, the outlets have turers sell their stock at much report. groups of consumers, to generate packed with consumers during the many recreational facilities and lower prices to the public, because The Jiemian report also pointed new growth points,” Wang said.