Givenchy Heads to 3rd-Tier Cities in China

on March 7 2011 | in Fashion Retail Store Openings | by | with No Comments

Baoding, a city near Beijing, is one of the latest targets in retailers’ expansion plans. It’s all in the game of a modern-day gold rush to third-tier cities.

The expansion among retailers continues unabated in a retail push to profit from China’s growing numbers of big spenders. They are spending on women’s haute couture, luxury menswear, accessories and perfumes, and Givenchy is the latest fashion house to make expansion news.

Reuters recently announced that Givenchy, which belongs to the LVMH retail empire, plans to open 10 more stores across Asia. Six of those 10 will be in China.

Givenchy already has 64 stores in China. Why such interest in setting up more? The answer is in teasing out retail opportunities beyond the saturated and increasingly expensive big cities.

Like other luxury retailers, Givenchy intends to set up shop in the country’s less glamorous but fast-growing third-tier cities.

“We started early in China so we’re not just in the first tier cities. We’re established even in the second tier cities. What’s interesting now is the trend is looking towards third-tier cities,” said Wilfred Koo, President of China, Asia Pacific at Givenchy.

Givenchy presently has two stores in other third-tier Chinese cities.

According to researchers at the Wharton School of the University of Pennsylvania,  retailing interest in Tier 3 cities is a trend that is expected to accelerate over the next 20 years. While these cities may lack present-day glamor, they represent potential as emerging urban centers.

According to Wharton, multinational retail corporations are in the frontlines, looking at China’s Tier-3 cities and “locked in a race to deploy their brands on an unprecedented scale as they seek first-mover advantage and try to build lasting consumer loyalty.”

China’s appetite for luxury goods significantly contributed to a record year for sales and profits at LVMH, which is the world’s largest luxury group.

Both Europe and Asia are the largest markets for LMVH.

Total LMVH profits last year rose 29 percent to $5.9 billion and Asia accounted for 34 percent of sales, next to Europe, also accounting for 34 percent.


[the vancouver sun]
photo credit: givenchy

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