Photo: Sarymsakov Andrey / Shutterstock
Luxury brands should expand their store networks in China?s first-tier cities such as Beijing, Shanghai and Shenzhen because shopping malls there are where the country?s wealthy people really go to spend money on luxury goods.
The Chinese site Fashion Note compared and contrasted the performance of retail sales and the rental rate of shopping malls in mainland China owned by Hong Kong?s Hang Lung Properties in the first half of 2017. This report included Shanghai?s Plaza 66, Shenyang?s Palace 66, Jinan?s Parc 66 and Wuxi?s Centre 66.
The difference in sales in the same retail chain in different cities sheds light on the store location strategy of luxury brands if they hope to profit further from this market that has shown signs of recovery in recent quarters. The findings suggest that only brands in Shanghai?s Plaza 66 have seen an increase in retail sales, and rent rates at the mall have also gone up. The rest of Hang Lung-owned shopping malls located in China?s second- and third-tier cities all reported less-than-expected sales growth. Their rents also dropped significantly with an average double-digit decrease.
Since mid-2016, renewed appetite for personal luxury goods among Chinese consumers have put the country?s luxury spending back on a growth track. Consulting firm Bain & Company predicted in May that China?s personal luxury goods spending will rise between 2 and 4 percent this year to reach a total of ?254 billion to ?2...