This week in the news, Starwood Hotels has emphasized brand loyalty in its expansion plans, luxury in China is now about hands-on experiences, Ferragamo is optimistic about expansion in China and travel retail, jewelry brand Qeelin has major expansion plans for China, and Chinese travelers are the biggest spenders at luxury outlet malls in Europe.
Starwood Hotels and Resorts is leading the race to cater to affluent travelers in China, with new properties to encourage brand loyalty. By the end of the year, the company will open four new properties in its luxury segment, as well as 16 more properties within its larger portfolio. Starwood has doubled its “luxury footprint” in six years, with 74 hotels opened around the world in 2013 alone and a current total of 160 properties. The pressure to expand comes from a need to generate brand loyalty among luxury travelers, who also tend to be world travelers. The more properties a company owns — and the more global locations in which the brand is present — the less likely it is that customers will turn to other brands for their accommodations.
In February, the Boston Consulting Group reported that experiential luxury, such as art auctions, travel, and gourmet dining, now accounts for 55 percent of all luxury spending across the globe. Yearly sales growth for luxury experiences also rose by 14 percent, whereas luxury goods grew just 11 percent in the same period. The appeal of experiential luxury has also gained considerably since the mainland’s recent crackdown on visible luxury products. Luxury companies with a large Chinese clientele are responding accordingly, offering exclusive brand education opportunities to their customers. Brands such as British wine and spirits merchant Berry Bros & Rudd and jeweler, watchmaker, and perfumier Van Cleef & Arpels are providing immersive classes to customers in China.
Ferragamo has more than 75 points of sale in China and the company believes the “coverage of territory there is quite well distributed.” Instead, the company will look for “opportunities in airports” given some new terminal openings. Ferragamo indicated plans to open four stores in China this year. First quarter China sales grew by 10 percent. Creating revenue growth in Asia is a top priority for Ferragamo, as Asia accounts more than a third of its global sales. Though Ferragamo makes nearly 75 percent of its money from shoes, handbags, and leather goods, the company sees potential for growth in watches, eye wear, and other accessories.
Qeelin, a Hong Kong-based high fashion jewelry brand has plans to double their mainland locations in China in just two years. The brand, which was bought by Kering in December 2012, will be debuting its first high-jewelry collection on June 30. Since the merger, Qeelin has already opened 8 new stores (for a total of 21 locations). They currently have twelve boutiques in mainland China, seven in Hong Kong, one in Paris, and one mini-shop inside of a Selfridges in London. For now, the brand’s focus is on their new 35-piece collection. The line features a number of traditional Chinese designs and symbols including pandas and lotus flowers. Qeelin lines also customarily feature white and rose gold, platinum, diamonds, sapphires, rubies and jade.
McArthurGlen Designer Outlets have struck it big with Chinese shoppers. The company, which runs 20 centers across Europe, has seen tax-free sales by Chinese shoppers increase 270 percent in the last two years alone. Chinese purchases also account for more than 20 percent of the company’s total sales. Chinese visitors to McArthurGlen outlets spend eight times more than the average shopper, and at their Italian locations—a whopping ten times more. McArthurGlen announced that their most popular stores this year included locations in Venice (up 94 percent in sales), Milan (up 55 percent), Vienna (up 30 percent), Rome (up 20 percent), and the Netherlands (up 17 percent ).
image source: interiordesignmagazine