Luxury stores shifted strongly to Asia Pacific



The pandemic and the recovery of the Chinese economy have quickly moved luxury stores from the US and Europe to the Asia-Pacific.

The global adoption of the Covid-19 blockade has had a huge impact on plans to open upscale stores in the first half of 2020. But since the third quarter, this market, according to Savills reports  received a strong recovery in the number of physical stores, surpassing the quarterly average.

Luxury stores shifted strongly to Asia Pacific

Louis Vuitton Chengdu IFS / ph: Louis Vuitton

 The Asia-Pacific currently accounts for 38.9% of the total global market share in luxury store launches from the beginning of the year to October. This is higher than in 2019, as the Asian region's market share.  Pacific Ocean is only 31.8%.  Thus, this is the first year the Asia-Pacific market surpasses Europe.

Retailers are focusing their focus on Asia-Pacific markets, especially China.  The country accounts for 18.8% of the total global share in new store openings by 2020, well above the previous three-year average of 6.4%.  China also recorded a 64.7% increase in high-end store openings compared to 2019, becoming the only major market with growth during this period.

 Many retailers have taken advantage of 2020 to expand their presence, opening physical stores across China.  This meets the demand for luxury goods at a time when most Chinese tourists cannot travel and shop in famous cities such as London, Paris or Milan.  China's domestic tourism has recovered rapidly after a restraint in the first quarter.

 The rebound in domestic tourism and economic achievements point to the growth potential in Chinese luxury spending.  In addition, the government is looking to support domestic consumption as a major driver of economic growth in the future.

 The latest forecast from the Boston Consulting Group shows that spending on luxury products in China in 2020 could increase up to 30% more than in 2019, despite the temporary store closings earlier this year.  

 The geographic shift in the opening of high-end stores has been around for the past three years, but this trend will become more noticeable in 2020 as spending on luxury products is post-blockade due to Covid-19's  some markets recovered quickly.

 Mr. Anthony Selwyn, Senior Head of Global Retail at Savills said that the Asia-Pacific market has made a very important contribution to the global business of luxury names.  "This area shows a positive recovery after Covid-19, it is necessary to promote more expansion and investment," he said.

 With the Vietnamese market, the demand for domestic luxury products is not expected to decline much despite a sharp decline in international tourist numbers.  In terms of retail space, retailers still hold great demand for high-end premises, in prime locations.  However, accompanied by the increasing pressure on rental rates.

 In contrast to Asia, the global luxury marketplace is expected to decline by as much as 45% year-on-year, as Europe and the US continue to be affected by the Covid-19 epidemic, the prolonged economic downturn and job instability.

Luxury stores shifted strongly to Asia Pacific

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