Despite stagnant sales of luxury goods at home, Chinese consumers are expected to remain the biggest spenders in the global market this year, accounting for 46 per cent of worldwide sales of the goods. Chinese shoppers are forecast to spend US$117 billion, or 9 per cent more, on luxury goods in 2015, with 78 per cent of the purchases made overseas, according to a report by Shanghai-based consultants Fortune Character Institute.
But just 10 per cent of worldwide sales were expected to be in China, down from 11 per cent in 2014, the institute said in its “China Luxury Report 2015”. The report looked at sales of jewellery, watches, accessories and clothes, but not cars, yachts, jets or art.
Institute director Zhou Ting said one top watch brand failed to sell a single timepiece in the past year, but she refused to name the company.
More than 80 per cent of global luxury brands had closed mainland stores and conditions were set to worsen, Zhou said.
“We expect more than 95 per cent of the brands will close some of their stores in the coming year, and upgrade the rest – to replace them with experience and service centres,” she said.
The latest case was Louis Vuitton, which closed three stores on the mainland, including its first one in Guangzhou.
Zhou said that five years ago Chinese consumers were willing pay more locally for luxury brands because they lacked awareness of and access to the overseas market. “Now as Chinese travel abroad more frequently, they are comparing goods on a global basis,” she said.
Luxury brands have started to attach more importance to customer experience and dabble in other sectors, such as wearable devices and restaurants, to keep existing customers and attract new ones.
Gucci opened its first restaurant, 1921Gucci, in Shanghai this summer and cut product prices in its mainland outlets.
Zhou said another option for the brands was customised services. More than 80 per cent of luxury brands had introduced various kinds of these services in the past year, and tailored luxury goods were a future growth area, the report said.
Surveying more than 3,800 Chinese with over 5 million yuan (HK$6 million) in assets, the institute found that brand names carried much less weight now for rich mainlanders.
About 40 per cent of respondents said the brand was important, but not the top factor in spending. On average, luxury items accounted for 10 to 20 per cent of the millionaires’ total family expenditure, it found.
By Mandy Zuo Courtesy South China Morning Post