European luxury boutiques continue to adapt to the drop in the flow of Chinese tourists

Chinese tourists have been scarce lately and some European stores, especially luxury ones, have had to rethink their strategies to move forward. They had to think about how to cater to locals rather than foreign tourists. In the 10 years before Covid, Chinese tourists were among the world’s biggest spenders on luxury goods, accounting for a third or 93 billion euros of global sales, the Financial Times reported.

Chinese shoppers bought most of their luxury goods overseas to take advantage of the authenticity factor, shop duty-free using European discounts, and save on the overall base price, which is often lower than in China.

Retailers have truly defined the shopping experience for Chinese tourists.

Claudia D’Arpizio, Global Head of Fashion and Luxury at Bain

These reasons have helped make Chinese tourists the biggest consumers of luxury per capita among all travellers, accounting for two-thirds of luxury sales in Europe before Covid, the Financial Times reported.

Meanwhile, high-end French and Italian fashion houses rode the post-pandemic wave of strong demand for designer brands with buyers eager to spend the lockdown savings despite turbulent stock markets and rising prices. .

The fall of the euro against the dollar, which should drive up the profits of luxury companies producing in Europe, encourages visiting Americans to spend more. Investors are watching for signs of a possible decline in appetite for designer brands, as well as plans by goods companies to implement further price hikes, aimed at protecting margins.

Shutdowns in China could continue to overshadow profits. In China, industry sales fell 40% in the quarter, according to estimates from Barclays, which forecasts overall organic sales growth of around 11%, half the pace of the previous quarter.

Concerns over China’s industry outlook rose in July, when updates from Burberry and Richemont showed the shutdowns had slumped sales by more than 30%, just as the country released weak data on second-quarter GDP.

Percentage of global luxury spending by nationality.

Chinese nationals were the biggest luxury consumers in the world before 2020

The strength of the US market will also be in focus for any signs of possible weakness. The United States overtook Europe as the biggest luxury market last year and is attracting a flood of investment in new stores from European brands.

Consensus estimates point to second-quarter sales growth of 17% at LVMH, 12% at Kering and 16% at Hermès, according to UBS forecasts. In several European cities, retailers have hired Chinese-speaking staff and focused on Chinese tourists’ favorite products, especially bags, which don’t need to be tried on like clothes.

Industry analysts now expect Chinese tourism spending to reach pre-Covid levels by 2025, the FT reported. Chinese shoppers are unlikely to find their way back to the shopping streets they had in 2019. They will most likely shop in China.

About Octavia A. Dorr

Check Also

Italian specialty shops in Philadelphia

Philadelphia, Pennsylvania – If you’re looking for a unique Italian specialty shop in Philadelphia, you’ve …