This time last year, China’s fashion and luxury capital, Shanghai, was on the brink of a relentlessly enforced Covid lockdown. The city’s glitzy high-end malls and boulevards lined with flagship stores were nearly empty.
Today is another story. On recent weekends, crowds flocked to popular retailers on or near Nanjing Road, China’s center of attraction since the opening of China’s first large department store in 1917.
“I splurge on more luxury,” said Sunny Chan, 24, as she waited in line to enter the Chanel store at the Plaza 66 mall. Zhang, who works for a consulting firm, used to buy six handbags a year. Now she buys up to five handbags a month.
“I change handbags every day,” added Zhang. “Everything felt pointless during Shanghai’s lockdown, so we should enjoy the moment now.”
Many Western fashion and luxury brands are benefiting from this new consumer mindset. Last month, his LVMH, the world’s largest luxury goods group by sales and owner of brands such as Louis Vuitton, Tiffany & Co. and Dior, posted first-quarter earnings up 17% from the same period last year. % increased. The French company’s largest sectors, fashion and leather goods, increased by 18%, mainly driven by a recovery in China.
Last week, LVMH’s share price hit an all-time high, becoming the first European company to surpass $500 billion in market capitalization. French rival Hermès said its sales in Asia (excluding Japan) rose 23% in the first quarter “driven by a very good Lunar New Year holiday.”
And Brunello Cucinelli, purveyor of $4,000 blazers and the “quiet luxury” trend, experienced a 56% surge in sales in the first quarter. Luca Lisandroni, co-CEO of the Italian brand, called 2023 a “golden year” for the Chinese market.
China’s luxury goods spending is recovering at a faster pace than the country’s economy as a whole. According to China’s National Bureau of Statistics, retail sales of jewelery, gold and silver surged 37.4% year-on-year in March, more than three times faster than the recovery of overall retail sales. Jewelry sales in China were his biggest ever in March. In fact, March marked his second highest sales in the industry outside of the pre-Chinese New Year gift-giving season.
“China will be a major player in the luxury goods industry this year, especially given other core markets such as the US and South Korea have slowed slightly,” Eduardo Aubin, an equity analyst at Morgan Stanley, said in a call last week. We expect it to be a growth engine,” he said.
He added that big brands “at the top of the pricing pyramid” with status symbol value like Chanel, Hermès and Louis Vuitton outperform their rivals. and Burberry.
“A lot of the initial spending that will drive the recovery so far has less to do with China’s middle class and more to do with the wealthy spending more,” Mr. Orbin said. A revival of middle-class spending It will start later this year.
This desire for luxury goods that China is famous for is nothing new. For more than a decade, the country of 1.4 billion consumers has led the Western luxury market, accounting for her third of market revenue. Two-thirds of that spending took place outside mainland China. Chinese tourists flocked to Hong Kong, Tokyo, Paris and elsewhere to avoid their country’s high import duties and sales taxes.
However, 2020 was the worst year on record for the industry as China closed its borders in response to the pandemic. After three years of relying heavily on online purchases, many Chinese shoppers delight in being able to touch fabrics, try on handbags and sunglasses, or simply share the company of others. I feel
In the Zhangyuan District, where extensively restored buildings with polished timber frames and elegant stone pillars, crowds gathered outside Dior stores waiting to see the celebrities. Onlookers didn’t have to wait too long. Famous Taiwanese singer Annie Yi left the store with a young woman carrying her white Dior bag big enough to fit a flat-screen TV.
Zoe Zhou, who was at a Dior store looking for a handbag owned by a member of K-pop band Blackpink, said she saw a frenzy for luxury shopping in her hometown of Nanjing. downtown mall.
“Now that the restrictions have been lifted, there are a lot of people who buy handbags.”
Many luxury brands have raised prices in recent months, especially in China. But traveling outside of China remains much more difficult than it was before the pandemic.
Air fares will be higher and flight schedules abroad will be significantly shortened. As part of a national security campaign, the Chinese government is making it difficult to obtain or renew passports.
Domestic destinations like duty-free shops on Hainan Island continue to gain popularity, and retail hotspots like Chengdu and Hangzhou continue to emerge, encouraging Chinese shoppers to shop more domestically. The trend is expected to continue. Social media posts about out-of-stock and long lines have also become commonplace.
“While the domestic recovery may be on track, international travel is still far from pre-corona levels. I don’t think so.” Commodity research in the city. Short-haul destinations like Hong Kong, Macau and possibly Japan could see Chinese spending come back sooner, given the yen’s depreciation, he added.
Not everyone is on top.Gucci and Balenciaga home Kering’s subdued quarterly results last week reminded investors that an uptrend in China won’t necessarily boost all brands.Earnings of the Paris-based group 1 percent growth The first three months of 2023 were hampered by a slowdown in U.S. and wholesale business, declining popularity of Gucci, and the continued impact of Balenciaga’s controversial advertising campaign unveiled late last year.
According to BNP Paribas Exane analyst Antoine Belge, “Strong brands with serious brand desirability are going from strength to strength.”
“Going big helps,” he added.
The same is true for the luxury market. Claudia D’Arpizio, senior her partner at consulting firm Bain, said she expects mainland China’s middle- and high-income population to double to 500 million by 2030. purchases of luxury goods in the world.
“Countries in Africa and Southeast Asia may be emerging as luxury markets, but China’s luxury market is unique because of its sheer size and is of great strategic importance. ”
Re-U Contributed to research.
