This week in the news, Lane Crawford turns its Shanghai store into a futuristic arcade, Costco has joined Tmall, luxury sales are set to fall in China, Chinese tourists are spending on experiences, and Swarovski will invest in Chinese real estate.
Lane Crawford has launched a new storewide campaign to celebrate the one-year anniversary of its mainland China flagship. The arcade-themed campaign, “Future: Play,” officially launched on October 10. Incorporating both online content and in-store offers, it showcases the brand’s growing Chinese profile. Though Lane Crawford began in Hong Kong more than 150 years ago, it has recently begun to expand onto the mainland, with four new stores opened there since 2007. The promotion also seeks to showcase the work of coveted designers, including Alexander Wang, Proenza Schouler, Stella McCartney, and Lane Crawford’s first haute couture brand, Giambattista Valli. Giambattista Valli’s archives will be showcased in a special in-store display, featuring 20 of the designer’s past creations.
Rather than building its massive warehouse store, popular American retailer, Costco Wholesale Corp, is entering China through an online flagship store on Tmall Global. The company will offer food and healthcare products and its private label Kirkland Signature branded products. Tmall Global is a branch of Tmall.com that enables overseas companies to sell in China without a business license. Orders can be shipped from outside of China. Recently, British retailer Topshop entered China through a partnership with Shangpin.com to sell its products on the fashion and luxury website and not through a physical store.
The luxury goods sector is expected to grow by 2 percent to 223 billion euros, and 5 percent to $283.2 billion at current exchange, in 2014 compared to a year ago. In 2013, sales grew by 3 percent and 7 percent at constant exchange compared to the previous year. Geopolitical uncertainties and declining consumer confidence in Europe contributed to the overall weakness. China’s growth rate has slowed in the last couple of years after a 20 percent jump in 2012. Sales are projected to drop by 2 percent for mainland China, which would be the first luxury sales decline in over a decade. The decline is largely attributed to the Chinese government’s austerity measures that have now expanded beyond public officials to businesses.
With more than 100 million Chinese tourists set to spend over $100 billion abroad this year, spending habits are shifting from material goods to categories such as entertainment, dining, and accommodations, as evidenced by the recent spending for Golden Week. According to a new study by UnionPay, spending on dining and hotels rose 52.2 percent year-on-year during Golden Week from October 1st through 7th. Spending on entertainment and leisure activities rose 56.6 percent, while spending on shopping rose 30 percent. In total, spending by outbound Chinese travelers during Golden Week grew 9 percent year-on-year, and total transactions rose 36 percent.
As part of its foray into the global property market, Austrian crystal brand Swarovski will invest in real estate in yet-to-be disclosed Chinese cities. This is not an uncommon business move, as Louis Vuitton, Hermes, and Fendi have all entered the property market in the last few years. By investing in high-end property, Swarovski hopes to boost its brand value while building customer loyalty through associating the brand with a luxury lifestyle. The company announced last month that it had partnered with Dubai-based property developer Tebyan to build a resort-style, ultra-luxury residential tower in Dubai. Swarovski executive Nadja Brakonier said that the Dubai deal is the first step in the company’s plan to enter the real estate markets in Asia, Europe, and the Middle East.
image credit: economist.com