Home / Knowledge / News / Fashion / Luxury brands reel as Chinese buyers turn thrifty
Luxury brands reel as Chinese buyers turn thrifty
25
May '16
As Chinese customers turn thrifty, some of the world's biggest luxury brands are feeling the heat. After a decade of expansion at breakneck speed fuelled by Chinese consumer demand, both the brands and the consumes are running out of steam, according to a Bloomberg report

New store space accounted for 55 per cent of global luxury revenue growth over the past eight years, while Chinese nationals powered about two-thirds of luxury market's growth over the past decade.

Now with the boom going bust, German luxury fashion house Hugo Boss has already announced plans to close 20 of the 131 stores it directly owns in mainland China. It's reviewing as many as another 20 of its least-profitable 430 stores globally.

The company is in talks with its landlords, so not all of these outlets will close -- but it expects to announce a sizeable number of exits later this year.

Gucci and Zegna were among luxury brands to cut their store footprint in the first quarter of 2016.

Italy's Prada won't say where its selective store cuts might fall, but as it expanded aggressively in Asia, it's a good bet that some will be there.

A clutch of other luxury brands are reviewing their retail network in Hong Kong and Macau. This could include closures, moving to cheaper premises or lease renegotiations.
Indeed, seeking rent reductions is an alternative to outright closure.

According to Bloomberg Intelligence, rent reductions of as much as 50 per cent are possible in some locations in Hong Kong. But demand remains strong for space in premium malls, limiting the scope for discounts.

In mainland China, tenants have most bargaining power in new malls, particularly in second-tier cities, hit by a slump in demand and plentiful new supply.

While the most attention might be on China, globally, brands are focusing on making their existing stores work harder. Rather than planning large scale openings, existing outlets are being refurbished.

The luxury groups are right to halt their dizzying expansion, and start to cut back. As they do, there could be opportunities for more niche upmarket brands to expand. Kering's Saint Laurent and LVMH's Givenchy Fendi and Celine could all open stores at more attractive rents.

And here's another trend that mirrors what is happening on high streets and main streets. As mid-market brands retrench, discount players are moving in to make the most of selling affordable luxury items. (SH)

Fibre2Fashion News Desk – India


Must ReadView All

Apparel/Garments | On 21st Sep 2017

UK fashion exports £10.7 bn in 2016; highest till now

Exports of British fashion goods rose to £10.7 billion in 2016, the...

Apparel/Garments | On 21st Sep 2017

BFC announces partnership with Chinese firm JD.com

The British Fashion Council (BFC) has forged a new partnership...

Textiles | On 21st Sep 2017

Indonesia’s textile exports may reach $15 billion by 2019

Indonesia’s textile-related exports are projected to reach $15...

Interviews View All

Nitin Bhatia
Trend Arrest

Setting up a brand for online selling is easy, but running the brand is not

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Claudia Kersten
Global Organic Textile Standard

‘GOTS is a very efficient supply chain management tool, especially for...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Aditi Somani
Aditi Somani

Aditi Somani specialises in luxury fusion wear with international cuts and ...

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

September 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search