The European luxury industry welcomes the end of the corona lockdowns in China. The return of well-funded Chinese tourists could ensure further growth.
Before the pandemic, Chinese visitors to Europe were a significant revenue driver for luxury homes. Chinese make up “a third of the luxury purchases in the world, and two-thirds of those purchases were made outside of China,” according to Joelle de Montgolfier, head of luxury at Bain and Company.
Her return has prompted RBC Bank to raise its growth forecast for the sector this year to 11% from 7% previously their clientele. After falling in 2020, the luxury sector was able to surpass pre-pandemic sales in 2021.
“People in China were consuming, but only in China,” De Montgolfier said. “In 2022, unexpected shortages in the country made the situation much more complicated,” she added. Still, the sector has seen an estimated jump of 22 percent to 353 billion euros, according to a forecast by Bain and Company in November. This growth was helped by the wave of US tourists visiting Europe armed with a strong US dollar post-lockdown, as well as visitors from Korea and Southeast Asia.
Another pleasant surprise were Europeans, “who have been neglected for decades…and who were far more interested in luxury goods than expected,” according to Erwan Rambourg, a luxury industry expert and author of Future Luxe: What’s Ahead for the business of luxury”.
“More staff”
With travel restrictions lifted in China, “there will be a sizeable return of Chinese tourists, but that’s more likely to happen in the second quarter,” said Arnaud Cadart, portfolio manager at asset manager Flornoy. “The pandemic is still very present in China and is affecting many people.”
The Chinese travelers may be needed should the flow of US visitors slow down. “European stores need this surge in Chinese clientele to replace the American clientele who may be shopping locally,” said Cadart.
In addition, the shops have to adapt to the Chinese clientele, who usually travel in groups and will join the large number of US tourists. “There are already queues in front of the boutiques, even without Chinese customers…more staff is needed,” de Montgolfier said. Otherwise, they risk “deteriorating the shopping experience” in the luxury boutiques.
There is another reason for concern, as it is unclear how many goods Chinese customers actually want to buy. The industry prefers to keep quantities low and does not discount to ensure exclusivity. (AFP)
This translated post previously appeared on FashionUnited.com.