Chinese consumers are now the world's biggest buyers of luxury merchandise, according to a report last week by management consultancy McKinsey, while another consulting firm, Bain and Company, found they account for a quarter of all such purchases globally.
This year growth has been restricted by slowing expansion in the Chinese economy and repressed gift-giving among and between officials and businessmen – a key element of building relationships, even at middle and lower levels.
While Tokyoites – possibly the world's most dedicated shoppers – continue their long love affair with futuristic shopping malls and starchitect-designed flagship fashion stores, a new and innovative breed of small-scale luxury retail villages is proving popular with young and old alike.
Those inside the luxury fashion industry know that established brands are losing their connection with the next wave of Chinese consumers.
Top and low-key premiums and emerging luxuries will see a boom in key cities, while mass premium brands will continue to grow in second- and third-tier cities, according to Zhou Ting, executive director of the research centre for luxury goods and service of University of International Business and Economics.
Until very recently, nouveau riche Chinese would not have been caught dead buying someone else's cast-offs – even if they were Hermès.
But as the Chinese market, which many luxury goods companies have come to rely on for growth in recent years, matures, a new brand of luxury shopper is emerging in China: the kind that loves a bargain more than a logo.
Increasing numbers of luxury goods groups are targeting Indonesia, despite the major challenges which face companies seeking to progress in the country.
Gucci, a unit of PPR, is developing a flagship store in Jakarta with a floor space of 5,500 square feet, as it attempts to exploit the favourable trends observable in the Asian nation.
Hermès, the French luxury group, opened its third store in Jakarta earlier this month, specialising in high-end watches, while Fendi, owned by LVMH, has also unveiled two new sites in Indonesia in 2012.
German fashion house Hugo Boss said second-quarter sales in China rose just 1 percent, as shoppers once hungry for luxury purchases stay away from shopping malls.
"Consumer sentiment continues to be shaky, with many customers cancelling or postponing luxury purchases," Chief Financial officer Mark Langer said after Hugo Boss reported quarterly results.
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US leather-goods retailer Coach, Inc. on Tuesday said sales rose 19 percent to USD1.26 billion for the second fiscal quarter ended on 1 January 2011 from USD1.07b last year. Net income for the quarter jumped 26 percent to USD303 million.
Direct-to-consumer sales increased 17 percent to USD1.10b from USD934m last year. Japan sales were even on a constant-currency basis, while dollar sales rose 8 percent driven by a stronger yen. China sales remained robust, as POS sales continued to comp at a double-digit rate.
Swiss luxury goods holding company Richemont reported a 23 percent sales growth for the three months ended 31 December 2010. The growth was broad-based, with the highest rate reported in the Asia-Pacific region, the company said in an official statement.
Swiss luxury goods group Richemont on Friday announced its unaudited consolidated results for the six month period ended on 30 September 2010.
Sales increased by 37 percent at actual exchange rates to EUR3.26 billion (USD4.41b) from EUR2.38b in the same period last year. At constant exchange rates and excluding the impact of the acquisition of NET-A-PORTER.COM in April 2010, sales increased by 22 percent. Gross profit grew 44 percent from EUR1.46b to EUR2.11b.
Restrictions on mainland Chinese visitors to Hong Kong have caught Wall Street's attention, with worries growing that the rules could hurt luxury merchants.
Announced a week ago, the new policy limits visitors from the neighbouring city of Shenzhen to one visit per week to Hong Kong, rather than multiple trips. Goldman Sachs estimated an overall 2 percent decline in Hong Kong retail sales as a result of the restrictions, with cosmetic firms hit the most.