Photo: CNS
A predicted stagnation in luxury sales growth, the recent and anticipated steep market corrections (further underscored to me in a conversation with a banker friend in Hong Kong revealing that people/institutions are looking to dump their RMB) affecting luxury sales and valuations in China, and the increase of the Travelling Luxury Consumer (TLC) making purchases abroad, make me question if the explosive growth that characterized luxury’s golden time in China is already over.
While I agree China is a necessary long-term investment in an ever increasing global and web-based economy, perhaps a good strategy to adopt (at least to weather the short-term turmoil) would be that of Angela Ahrendts, Burberry’s chief executive, who is targeting TLCs, its key customer group and a more powerful force than the Chinese market alone. Of the Chinese TLC she remarks, “When Chinese consumers travel, they spend six times more than when they stay at home.” That’s powerful data that cannot be ignored.
This spending pattern could be for a number of reasons, like the cachet of shopping trips abroad or simply avoiding the 30% luxury goods tax on the mainland, but regardless of what drives the Chinese TLC, in light of the financial turmoil across Europe, instability in the U.S., and the anticipated further correction in China, it makes sense to target a meta-state customer—all TLCs. And, fortunately for luxury brands, the luxury consumer is the most uniform segment to market and cater to anywhere in the world.
