Our Thoughts > How popular will luxury outlet malls in China be?
How popular will luxury outlet malls in China be?
Many Chinese shoppers seek luxury retail closer to home.
Not every Chinese shopper can buy their Prada in Paris or their Max Mara in Milan.
As China’s middle class swells, foreign and domestic retail groups are opening discount outlet malls in China to help mainlanders get luxury bargains closer to home – preferably while pretending that they are really somewhere else.
Value Retail, the European discount luxury outlet chain, says three out of four Chinese tourists to the U.K. visit their Bicester Village outlets in Oxfordshire, making it one of the top tourism destinations for Chinese visitors.
Moreover visitors from greater China spend more per transaction than shoppers from any other country.
Value Retail believes that the model of retail tourism which has proved so popular among Chinese in Europe, will appeal just as much back at home.
Shopping remains one of China’s most popular forms of entertainment, according to a recent McKinsey report, which found that the proportion of Chinese consumers who identified “retail-tainment” as a favorite pastime stood at around 40 percent.
Value Retail’s Suzhou Village, part of a government-backed resort project that includes upscale hotels, is due to open early next year.
The Suzhou outlet will offer the kinds of brands normally present in Value Retail outlets, such as Prada, Gucci and Dior, along with Nike, Adidas and Puma.
But it will also offer the kind of service that shoppers associate with European luxury, such as “hands-free” shopping – delivery of parcels to plane or train after a day of shopping – and fine dining, rather than a fast food court.
Given the fact that Beijing’s recent austerity campaign, discouraging government officials from indulging in ostentatious luxury purchases, may be a good thing for luxury outlets. This campaign may lead to a surplus in luxury inventory for brands in China, and outlet malls are a perfect source for those brands to rid excess product.
These sorts of outlet malls are geared towards lifestyle shoppers who want to spend the whole day at the mall. Since such a massive percentage of Chinese consumers fall into this category it’s quite likely these luxury outlets will be a huge success in China.
A good location means foot traffic, regular customers, and stable growth revenue. But how to choose the right location?
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