China has emerged as the most popular destination for new luxury store openings in 2021, as mainland consumers looked to domestic stores to get their luxury fix.
With the Covid-19 pandemic restricting travel for shopping tourists last year, Chinese consumers still managed to account for 21 percent of the world’s overall luxury spend in 2021, according to research firm Bain & Co., despite China’s regular travel tourists pent up inside the mainland. And, with the travel infringements, most Chinese consumers looked to local luxury retail stores to shop for high-end goods.
“In recent years, new store activity globally has tended to follow the Chinese luxury consumer into destination markets. However, with the pandemic restricting international travel, Bain & Co. has recorded that 21 percent of the total luxury goods spend last year took place inside of China.”
With travel restrictions impeding Chinese travel holidays to Europe and the U.S., many luxury retailers and brands were forced to rejig their retail expansion efforts, targeting high-spending shoppers in mainland China, which saw 55 percent of global luxury store openings take place in Mainland China in 2021, the research firm added.
Shanghai and the duty-free island of Hainan played to host to most of the store opening activity in 2021, dominated by the top three luxury houses: LVMH, Kering and Richement: the European luxury conglomerates accounted for 41 percent of all new openings globally in 2021, up from 33 percent in 2019.
“Strong domestic sales in China and the swift economic rebound, has propelled a higher expansion rate among luxury retailers,” said Nick Bradstreet, director, head of retail, Savills Asia.
“Shanghai last year secured 16 new major retail projects and there are significant growth prospects for the country’s luxury retail market due to the lack of outbound travel fuelling luxury domestic spend as well as government emphasis on supporting domestic consumption.”
And the luxury retail trend seen in China in 2021, is expected to continue in 2022, with global international air passenger travel slowly returning to pre-pandemic levels, but not before 2025, according to Marie Hickey, director, Savills Research.
“However, we do expect to see a much faster recovery in Europe and in North America, which would stimulate a resurgence in requirements from luxury brands as we move into 2023.”