Reporter | Chen Qirui
Edit | Lou Shuqin
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According to a report by British property consultant Savills, China is the market with the largest number of luxury brands opening stores in 2021. 55% of new luxury brands are located in China, with the asian market share falling to 10% except China, and 14% in Europe and North America.
Savills pointed out in the interpretation article that the luxury market in China's second-tier cities has performed better than that of first-tier cities, and luxury brands have begun to accelerate the expansion of the sinking market. The opening of high-end shopping malls such as Wuhan Plaza 66 provides luxury consumption opportunities for second-tier cities, and the perfect supply chain and relatively low rents are also the reasons why luxury brands have entered the sinking market.
The early control of the epidemic and the return of overseas consumption have allowed China's luxury industry to recover rapidly from the second half of 2020, and China has become one of the few markets to record positive growth in luxury consumption in 2020. According to Bain & Company, China accounts for 21 percent of the global luxury goods market and is expected to reach 25 to 27 percent by 2025.
Luxury brands have invested more in marketing in the Chinese market, with brands such as Louis Vuitton and Dior holding fashion shows in China more than once after the epidemic, and a number of limited series have chosen to debut in China. The vigorous development of Hainan's duty-free market has brought the "Watches and Miracles" luxury watch exhibition to Sanya.
Behind large-scale marketing, luxury brands are looking forward to achieving higher growth in the Chinese market.
Traditional high-end shopping malls such as Plaza 66 in Shanghai, Taikoo Hui in Guangzhou and SKP in Beijing accelerated their growth. Cities such as Chengdu, Xi'an and Wuhan also saw an explosion of luxury consumption, with Swire Gucci Chengdu becoming the brand's highest global sales store in 2021, and Henan's first Hermès opening day nearly sold out.
The active market has allowed luxury brands and developers to increase their layout of the sinking market. Louis Vuitton opened new stores in cities such as Nanning and Taiyuan, and the new Louis Vuitton House was located in Chengdu. SKP's shopping malls in Chengdu and Wuhan will open in recent years, while Hang Lung and Sun Hung Kai also have a presence in non-first-tier cities.
Interface Fashion has reported that adding high-end retail and introducing luxury brands have become a means for some cities to promote commercial upgrading. Luxury goods have appeal and influence in specific areas, and if cities can access similar resources, they will have a benchmarking effect on the positioning of cities.
But reality has a different side.
Wuhan is another city after Chengdu and Xi'an, and the city's high-end shopping malls are mainly Plaza 66 and Wushang Plaza. Wuhan MixC, which opened in the spring of 2022, was previously positioned as a luxury shopping mall, but according to the brand lineup disclosed by the opening, there are no indicator luxury brands yet settled.
Luc Hennard, CEO of Hermès Greater China, said in an interview with Interface Fashion that a new store will be relocated and reopened in Wuhan in the future. At present, there is only one Hermès store in Wuhan, which means that although the number of high-end shopping malls in Wuhan has increased, the brand's intention to open new stores has not increased.
The luxury brand store opening process is complex, usually requiring a process that lasts 2 to 3 years, such as inspection, renovation and shop. In the current unstable situation of the epidemic, the ability of high-end shopping malls to maintain stable growth has been weakened, and luxury brands that were expanding rapidly will be more cautious about store opening plans.
Compared with the shopping mall itself, luxury brands are more flexible in opening stores. When the market is hot, luxury brands can speed up the opening of stores or enter the sinking market through the form of pop-up stores. When the market is cold, brands can also quickly adjust the layout.
For high-end shopping malls, if the head brand withdraws, the subsequent investment process will be hit, and the prospects of the entire shopping center will also be affected. High-end shopping malls may take more than 10 years to return the cost, and in the current situation of instability, the risk of oversupply is likely to be triggered.