This week in the news, boutique hotels in China are coming into their own, women are driving Omega’s growth in China, Michael Kors’ new apps gives fashionistas worldwide the ‘jet set’ experience, Abercrombie plans to launch 100 new stores in China, and Chinese consumers pay a higher price for luxury.
In the world of Chinese luxury accommodations, boutique style hotels appear to be many travelers’ top choice. Boutique hotels in China are a hybrid mixture of Western and Chinese style that cohesively and comfortably incorporate a number of traditions. While boutique hotels began to surface in the 1980s in Europe and the US, they are still a new attraction in China. Though many Chinese consumers are currently attracted to luxury five-star hotels and chains with name recognition, boutiques are beginning to come into their own. As these niche businesses display an affinity for providing an original and relaxing guest experience, they will work their way into the mainstream.
Sales of Omega watches in China have begun to slow after growing strongly for the past 10 to 15 years, but the watchmaker’s presence in the market remains firm. The company would not be “pulling back” in China. The brand currently maintains 120 points of sale in the country, and the brand expects to increase this number, particularly in lower-tier cities. According to the Fédération de L’Industrie Horlogère Suisse’s 2013 annual report, exports to China decreased by 12.5 percent in 2012. This decline is largely attributed to the Chinese government’s recent crackdown on extravagant spending, though Omega President Stephen Urquhart claims that his company’s female clientele has “somewhat insulated” the brand from the austerity push.
US fashion label Michael Kors inaugurated its flagship store in Shanghai earlier this month by debuting the new Jet Set collection in an extravagant fashion show. Now, thanks to a new app, fashionistas who could not attend can experience the show for themselves. The show was held in an airport hangar outside of Shanghai and stressed the brand’s global ambitions, featuring top models from around the world and over 15,000 square feet of projection screens. The MK360 app gives mobile phone users an “intimate” recap of the show. The app begins with a shot of the Shanghai skyline, progresses through the city, and finally takes the user to the hangar show. The app provides a 360-degree view of the show and a customizable experience.
Sales may have slowed for Abercrombie & Fitch Co in the US, but the retailer is upbeat about China where the market opportunity for “causal luxury” could be huge. Over the next ten years, A&F will launch 100 new stores in China under its A&F and Hollister brands. Abercrombie executive Craig Brommers is optimistic about China because he believes that A&F is creating a new segment in the market called casual luxury, with growth expected to accelerate as more Chinese become middle class. Early signs are promising, as the seven Hollister stores in mainland China have seen sales increases of 35 percent, and the company expects similar results in its Abercrombie & Fitch stores.
In a study done by Deutsche Bank on world prices, it was found that the US is home to some of the best bargains. While China was also found to have its fair share of deals, the results are quite different when it comes to name brands such as Apple or Adidas. Though taxes play a role in China’s cost difference, even without, luxury sedans cost up to 37 percent more, and leather goods about 50 percent more in China versus the US. For the budget-conscious shopper, China makes up for such brand name price hikes with more affordable commodities. A Big Mac in China is just $2.74 compared to $4.62 in the US, and a two-liter of Coke is only $1.13. Beer remains quite reasonably priced as well at an average of $2.43 a pint compared to $7 in New York.
Image source: Markus Pritzi/MAC Jeans