According to the report of Savills, a real estate service provider, China will be the market with the largest number of luxury brand stores worldwide in 2022, but its share in the total will decline from 55% in 2021 to 41%. The delay of work stoppage caused by the epidemic and the changes in the social retail environment are the main reasons for the slowdown in the number of new stores opened.
In Asian markets other than China, the number of luxury brands opening stores increased by 12%. This is also related to the slowing growth of the Chinese market. Luxury brands hope to make up for the decline of the Chinese market by gaining growth in other markets. Southeast Asian countries such as Vietnam, Thailand and Singapore are the main expansion markets.
However, Vietnam and Thailand, as emerging markets, are not only not large enough for wealthy people, but also lack of commercial projects suitable for luxury brands to open stores, which will also challenge the development of their high-end retail industry. In Singapore, a smaller country, although the luxury retail market is extremely mature, the problem is more prominent.
In other regions of the world, the number of newly opened luxury brand stores in Europe increased the most, reaching 77%, accounting for 23% of the total share. This is mainly due to the return of international tourists and the fact that the rent of many high-end retail blocks has not yet recovered to the pre epidemic level. Many luxury brands choose to take this opportunity to "bargain" large shops in core areas.
The Middle East is another region where the number of luxury brands opening stores is growing rapidly, although it only accounts for 6% of the global total. Similar to the Southeast Asian market, the Middle East was not a key market for luxury brands in the past, but it has a larger number of wealthy people, which makes it considered to have higher development potential in the future.
From the brand level, the brands of LVMH Group, Kaiyun Group and Lifeng Group accounted for 37% of the total number of new luxury stores in the world in 2022. By category, 64% of new stores sold fashion ready to wear and accessories, up 21% from the previous year; However, the proportion of jewelry and watch brands fell from 29% to 24%.
However, with the optimization of epidemic prevention policies, the layout strategy of luxury brands in China has been accelerated again. The renovated Hermes Beijing Wangfu Peninsula Hotel recently opened. According to the plan, Hermes will return to Tianjin and Wuxi in 2023 and 2024. Its executives said that they would open new stores in at least one mainland city every year in the future.
High end shopping centers developed by several operators have also been opened or updated recently, and this luxury brand provides space for landing. Nanchang "Wushang Mall" operated by Wushang Group introduced brands including Tiffany; Nearly one year after its opening, Haikou MIXC welcomes Louis Vuitton, and Lanzhou MIXC will also introduce several luxury brands.
Adding high-end retail and introducing luxury brands have become the means to promote commercial upgrading in some non first tier cities. Luxury goods have appeal and influence in specific fields. If cities can obtain similar resources, they will have a benchmarking effect on the positioning of cities.
"There are also a large number of high net worth people in China's second tier cities. If the luxury goods group intends to improve its sales performance in the future, it is the only way to expand to these cities." Wang Lei, head and director of the commercial and retail services department in North China of Savills, said to Interface Fashion, "But the habits of consumers need to be cultivated. Opening luxury stores or malls in these cities will face more challenges."
The specific tests include how to let consumers know the brands beyond the first tier, let them accept the items beyond the popular and entry-level models, and still stay in the same place to shop after the recovery of outbound travel. The report from data analysis agency Retviews by Lectra shows that the price gap between China and Europe is still large, and the price difference between some Louis Vuitton and Gucci handbags can reach 30%.
In response to this phenomenon, many luxury brands are further regulating the prices between the Chinese and European markets to avoid a large gap between the two sides. According to the report of Oliver Wyman, a consulting company, 70% of China's luxury consumption is assisted by sales personnel. Providing more sophisticated services may enable consumers to stay at home longer.
In fact, upgrading services is the current trend in the luxury industry. According to previous interface fashion reports, Louis Vuitton, Dior and Chanel have successively opened VIP member rooms independent of ordinary stores in Beijing SKP to serve high net worth people. Gucci recently opened the world's first VIP salon in Los Angeles.
"In addition to going out of the first tier cities, deep cultivation of refined operation is another key point for luxury brands to develop in China," said Wang Lei. "In addition to conventional clothing retail, many luxury brands have begun to provide more comprehensive experience, such as tea or dinner services, which is also a way of in-depth development."
To some extent, whether it is opening VIP members or providing catering services in stores, it is a way for first-line cities with limited high-end retail projects to continue to explore their consumption potential. Wang Lei believes that this model will also be used in cities outside the frontline in the future, but it still needs time to develop.
