Hong Kong : Luxury brands are getting some hope of recovery from the pandemic situation of corona-virus as Chinese shoppers are finally starting to boost high-end handbags, shoes and jewelry again
But leading brands still have some difficulties and will need to rethink about their sales and business strategies.Several luxury goods companies reported an uptick in China this spring as people emerged from weeks of lockdowns, spurring what someanalysts have called a trend of “revenge spending” — the release of pent-up demand once people aren’t forced to stay home.
Tiffany (TIF) pointed to China as a big spot for its jewelry business, saying that retail sales surged around 30% in April and 90% in May compared to the same months last year.
And Swiss jewelry and watchmaker Richemont has pointed to China as a bright spot in recent weeks, reporting “strong demand” in a results announcement last month since its 462 boutiques in the country opened back up.
Because of the recent lift, China could be the one market where luxury retailers see a turnaround this year, according to Claudia D’Arpizio, a partner at consulting firm Bain.
Chinese customers may be spending more money on goods at home because they aren’t able to travel as easily. Two-thirds of sales from Chinese shoppers typically happen outside China, according to analysts. But much of the world is still dealing with the pandemic, limiting foreign trips and the opportunities people have to spend any excess cash.
But the industry’s still hurting
But success in China is only part of the story. As customers elsewhere stay home and hold back on luxury shopping in favor of essential purchases or cheaper, unbranded goods, sales of personal luxury items — including handbags, shoes and clothing — are still expected to take a A closed Louis Vuitton store in Wuhan in March. Its parent company, LVMH, told investors in April that sales had surged for most of its brands in China as the market there reopened.
How we shop has changed
To cope with the new reality of catering more heavily to the domestic market, companies will have to adjust their strategy and figure out how to reach more local customers. China is already giving brands a blueprint. Even before the outbreak, shoppers were spending money closer to home as they avoided hubs such as Hong Kong due to mass protests, and as brands reduced the price gap that had typically made their products cheaper elsewhere
Boutiques are here to stay
Some storied luxury brands that have typically held out on e-commerce are rethinking their strategies, too.Swiss watchmaker Patek Philippe, for example, recently started selling timepieces online for the first time because of the crisis, according to Roberts, the Euromonitor researcher. The company did not respond to a request for comment.