Domestic Tourism Could Be The New Travel Retail for the Chinese

on February 5 2015 | in Lifestyle Retail Travel | by | with No Comments

travel retail, china domestic tourism

A new line of resorts is set to offer China’s rising middle class a unique travel and retail experience.

Jihua Parks will open the first of their destination centers at the end of the year. Geared toward activity sports but also encompassing the shopping, hospitality, and entertainment sectors, the parks are designed as leisure destinations for middle-class travelers, and will give them the chance to purchase international brands not easily obtained in China.

Each of the two parks expected to open in 2015 cost $200 million each, and will be located in the southwestern city of Chongqing and the northeastern city of Changchun. The resorts are being developed by China’s Jihua Group, a company with a $4.3 billion turnover that expects to open 35 of such leisure destination centers over the next decade. The Italian real estate consultancy ArcoRetail is also a collaborator on this project, and is contacting brands in duty free and travel retail on Jihua’s behalf.

Luca Bastagli, ArcoRetail’s CEO, noted in an interview with The Travel Retail Business that the opening of the parks would provide international brands with a new sales outlet in the Chinese market. He also elaborated on the role of retail within the resort environment.

“Retail is not the focus of our parks, but just like an airport, we have shops so that people can fill their dwell time, after doing sport or after dining,” Bastagli said. “Our rents are also four or five times less than what brands pay downtown so they don’t need to reach the turnover of a boutique. Our philosophy is to have small shops and the same furniture used at the airport selling the same portfolio of products… so not the complete lines, but more items such as accessories.”

With China’s upper middle class expected to grow to 400 million by 2020, Bastagli believes that domestic tourism sector will experience major growth over the next few years.

“The biggest business in the next five to 10 years in China will be domestic tourism,” he says. “In the last Golden Week, more than 400m Chinese left the big cities to go to another place for two days. They spent between CNY1,000-2,000 ($162-323) each doing this.”

Retailers will benefit from lower rent to maintain shops in the parks, and as a result, prices will be flexible. Jihua Group expects that each visitor will spend an average of $237 daily during their stay, and each of the parks is expected to receive 3 to 4 million visitors a year.


 

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