Is China’s smaller cities becoming luxury retailers’ next “gold rush”?
Many luxury retailers are betting that China’s smaller cities will have HUGE upside potential.
Trinity Ltd., a luxury menswear and accessories retailer in China under six brands, Altea, Cerruti 1881, D’urban, Savile Row suitmaker Gieves & Hawkes, Intermezzo and Kent & Curwen, announced that it will add 50 or more stores in smaller Chinese cities as wealth from booming coal and car industries has quicken demand for luxury clothes.
Trinity expects to open 17 stores in Inner Mongolia and also stores in Zhoushan in eastern Zhejiang province. With three stores in Hohhot, Inner Mongolia, the retailer plans to open stores in the province’s cities of Ordos and Baotou, according to Sunny Wong Yat Ming, Trinity’s Managing Director. Adding these new stores, Trinity will have more than 500 outlets in greater China by 2011. Currently, about 70 percent of Trinity’s stores are outside of China’s tier 1 cities, including Beijing and Shanghai.
Economic growth in smaller cities is more than 10 percent, faster than the national average, Wang said. Zhejiang, a province in the eastern coast of China with Hangzhou as its capital, saw its urban households’ per capita disposable income rise 12 percent to 14,919 yuan (US$2,198) in the first half of this year, ranking second after Shanghai and beating Beijing. Meanwhile, Inner Mongolia surpassed Shanxi province last year to become China’s biggest coal supplier, according to government statistics.
Trinity, the luxury menswear division of Li & Fung Group, plans to expand and is in talks with other European labels to bring their brands to mainland China, according to Wong. With China’s economic boom, the demand for commodities has boosted the fortunes of smaller cities that are rich in natural resources. The retailer expects strong growth in its business as a result of rising income in smaller cities. “The biggest spenders in China are young and don’t care about discounts,” Wong said. “They love European brands.” In a country where fake goods are so common, Trinity is a trusted source for authentic products and good service. The retailer also educates its clients on the ways of luxury goods, adding to their growing sophistication toward luxury products.
While Trinity represents European brands, the retailer has a local design team that are attuned to the design and needs of Chinese customers such as adjusting sleeve designs for generally shorter Chinese arms.