Despite the global economic slowdown, luxury retailers have continued to globalise, with the majority of luxury brands present across all three major global regions.
On average, luxury retailers operate in more than 25 countries and 50 cities worldwide – giving them the largest global presence of all retail sectors. Growth in the global footprint of luxury retailers has mainly been geared towards emerging markets.
China has been a major target, where the luxury sector is thriving, driven by rapidly increasing wealth and disposable income, along with a strong demand for new luxury Western brands. This is particularly evident in the major cities across China where many of the luxury brands have not been available for long and consumers are looking to display their personal wealth with luxury brand products.
Hong Kong maintained its position as the most popular global destination for luxury retailers, attracting 91% of luxury brands surveyed as part of the CBRE study. Hong Kong was closely followed by London, attracting 87% of luxury retailers, and by Dubai in third place, with 85% of luxury retailers present. In total, Asian cities accounted for eight of the top 15 luxury cities, with Taipei, Beijng, Shanghai and Singapore all featuring in the top 10.
As the global economic recovery begins to gather some momentum, Asia continues to largely lead the recovery with many global luxury brands identifying China as a vital market for future growth. Some of the world’s best known luxury brands are strategically targeting emerging markets as part of their longer-term growth plans. Attracted by the powerful growth of economies in countries such as China and Brazil, many brands are looking towards previously untapped markets for new retail expansion prospects. Brazil is rapidly becoming a new luxury hot spot in response to its growing economy and emerging middle class, with retailers such as Burberry – who recently opened their first store in Brasilia – planning to open a further four stores there this year. Louis Vuitton has recently opened three flagship stores in Shanghai, with other brands such as Tiffany & Co, Hermes and Prada all expanding rapidly across China.
Joel Stephen, CBRE Retail Services China, said: "A common trait of emerging market consumers is that they are often seeking ways to display their new-found wealth. This is clearly true of the luxury shopper in China, who is increasingly looking for and excited by new brands entering the market.
"China offers retailers a huge opportunity for growth not only in major cities, but also in second and third-tier cities, particularly for luxury brands already present in China but looking to increase their coverage across the country. Generally in these additional locations, such as: Hangzhou and Nanjing, international standard retailing space has been limited; but with a significant pipeline of shopping centre development due to open in the next few years, space will soon be available to support retailer expansion plans. In the meantime, Shanghai and Beijing will continue to attract retailers looking to establish flagship stores to build brand awareness across mainland China, and the luxury market in these top cities will become increasingly sophisticated."
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