While luxury sales dim in the U.S., China, projected to become the world’s biggest luxury market by 2025, is stimulating recovery in 2023. And the ‘love’ is being reciprocated by brands eager to focus on its VIP customers.
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As some mid-range brands including Nike report declines in sales in China, on the higher-end of the spectrum the likes of Ralph Lauren and Prada tell a rosier story.
“China returned to be an engine of growth, driving a solid sales rebound in Asia Pacific. Our priority for the year remains increasing store productivity, focusing on retail execution,” said Prada’s group chief executive officer Andrea Guerra, as the Milan-headquartered company reported retail sales were up 23 percent year-on-year, driven by a strong rebound in Asia.
For full-year 2022, Chanel reported a 17 percent uptick in sales to USD17.22 billion, thanks to an increase in sales with Chinese shoppers.
Luxury brands such as Dior and Louis Vuitton are finding that strengthening their presence involves more than aggressively growing their retail footprint, opening VIP spaces in respective stores at high-end shopping centre SKP Beijing.
Chanel in particular is making a very focused play for VIP customers in Greater China, with plans to soon have five VIP salons across the mainland, WWD earlier reported. Two of those boutiques, known as Chanel Les Salon Prives, opened discretely in recent weeks in Guangzhou and Shenzhen, spanning 3,200 and 4,300 square feet, respectively. Another in-store VIP salon is set to open in October alongside a renovated Chengdu IFS store.
In Hong Kong, Chanel signed a lease for a new two-storey boutique in Causeway Bay beginning May, following a private thematic exhibition at West Kowloon Cultural District’s Arts Pavilion, “A Journey into Allure,” which could be accessed exclusively by top clients.
In an interview with U.S. media, Philippe Blondiaux, Chanel’s group chief financial officer, said Chanel’s momentum from last year is continuing into 2023, tracking double-digit gains on the mainland.
While other regional markets are pitching in with their share of sales, the rise of VIP stores exclusively catering to high spenders appears to be concentrated in mainland China for the time being.
A Bain report noted luxury brands are no longer competing with only each other for a share of the pie, as consumer appetite for luxury travel and experiences, such as spas and cruises, has naturally rebounded along with the return to ‘normal’.
Key to enhancing the VIP experience are exclusive new store formats, special product collections, and privileged access to other offerings.