Economic slumps are temporary, but quality and glamour last forever. The executives at LVMH’s Givenchy, at least, aren’t worried about Xi Jinping’s crackdown or the supposed market slowldown. The brand plans to triple its number of stores in China over the next two years, reports South China Morning Post.
“Concern about the crackdown on the luxury goods market on the mainland is likely to be temporary because China needs to promote domestic consumption by boosting the consumer discretionary sector, such as services and non-essential goods,” said Sebastian Suhl, chief executive of Givenchy since March. Part of Suhl’s expansion plan is to increase the number of outlets to 30 from about 10 in major cities such as Shanghai and Tianjin.
And Suhl is no amateur. He previously served as chief operating officer for Prada. He reports that Givenchy’s first boutique on the mainland, which opened in Shanghai in December, had shown “high single-digit” growth in revenue and earnings at the same time competitors are scaling back. “Our more diversified product line, including leather goods, ready-to-wear for both men and women, helps us to weather the economic cycle,” he said.
Not all brands display Givenchy’s confidence. PPR’s Gucci said it would not open any new stores on the mainland after growth staggered into the single digits last year. Even LVMH, parent company to Givenchy and 60 other luxury brands, said it would not open new stores in second and third-tier cities after noticing a preference for luxury shoppers to visit big cities.
Why is Givenchy so bold? Unlike some of the other luxury brands, Givenchy is under exposed in China and has greater upside potential with more exposure.
photo credit: lane crawford, givenchy