First-Tier City Long Associated With Third-Rate Luxury Market
This week, Louis Vuitton opened its largest China flagship at Guangzhou’s Taikoo Hui mall
While it may be very much a top-tier city, with an annual GDP of over 1 trillion yuan (US$152 billion) — placing it in an elite group that also includes Beijing and Shanghai — Guangzhou can be a frustrating market for major luxury brands. Despite the showpiece malls and comparatively high per capita income of Guangzhou residents, top brands have been slow to invest heavily in their Guangzhou operations, and for good reason: local luxury consumption lags far behind other key markets. As one luxury retailer told the Yangcheng Evening News this week, “In China, for many luxury brands, in terms of luxury consumption, the top cities are Beijing, Shanghai, Shenyang, Hangzhou, Chengdu and Dalian. Guangzhou is still not really in that top echelon.”
Still, brands continue to expand, or make their debut, in Guangzhou. Yesterday, Louis Vuitton opened its largest China flagship in Guangzhou, an 1,800 square meter mega-store at Taikoo Hui mall, and at the city’s La Perle mall, Hermes recently opened a fully remodeled location and Gucci re-entered the city after a seven-year absence. The question now is, will the Guangzhou luxury market finally start to live up to its potential?
From the Yangcheng Evening News (translation by Jing Daily team):
While it’s one thing to base perceptions about Guangzhou’s luxury market on the word of a mall spokesperson, the key to addressing whether the city is a good bet for major brands lies in consumer behavior. Up until now, Guangzhou’s proximity to nearby, duty-free Hong Kong has been perhaps the greatest hindrance for luxury brands, as Guangzhou locals have traditionally preferred to simply pop over the border and buy high-end goods at a significant discount. But, as the Yangcheng Evening News holds, this may be changing.
Ultimately, Guangzhou’s sales boost seems to come primarily from the convenience factor. As one shopper told Efu this week at the opening of the new Louis Vuitton flagship at Taikoo Hui, “We all know that prices [here] are higher than in Hong Kong or overseas, but it’s really convenient. So if I think of a gift I want to buy for someone, I can go get it right away. It used to be that Guangzhou barely had any [major] brands.”