Today's UK Times newspaper has an article by Carolyn Asome which gives further evidence of the dynamic at play in the world of luxury fashion provided by the Chinese consumer. In Britain, not a country with particuarily easy visa access for the Chinese, the numbers visiting will rise in 2014 to 204,000 from 89,000 in 2012. Moreover their spend is high. She quotes a figure of £1601 (USD $2628) as the average value of a single transaction by a Chinese visitor within the luxury shopping districts in London of Mayfair, St James and Bond Street. Little wonder that both growth and tastes are being influenced by this powerful group of consumers - her particular focus is their impact on couture.
The Chinese love to travel. The Chinese love to shop when they travel. It's that maxim that drives the figure quoted by Bain & Company in their 2013 "China Luxury Goods Market Study" - two-thirds of Chinese luxury spending is being carried out abroad.
None of this is a surprise and yet some brands seem to be sluggish to respond to a luxury growth slow down in China from 7% in 2012 to 2% in 2013. Over expansion of their retail footprint instead of genuinely engaging with the consumer has seen footfall decline and profitability plummet. All of this in the context of a trend to more restrained (government enforced) displays of wealth. Nowhere is this exhibited more than in watches where growth has declined by 11% over a year.
All of this pushed me to sneak a look at an article I had written last May for Luxury Briefing's June 2013 edition. The editor and I opted for the headline "China - Reasons to be cheerful" because my prognosis was, and still is, for a positive performance for luxury brands who enage the Chinese consumer. However, in that article I argued for nuance of approach and suggested that brands had to change their ways. Nothing I've read or observed recently suggests I was wrong. For some brands it might now be too late.