Published on : Tuesday, January 7, 2014
Luxury brands are at war. They are stepping up the battle for travelling shoppers with more outlets at airports and on cruise ships, tapping into one of the fastest growing sections of the market that looks set to keep booming thanks to soaring numbers of Asian tourists especially the Chinese.
Revenues from travel retail, which also includes sales on airplanes, rose 9.4 per cent in 2012 to $55.8 billion, according to a market study by Generation Research.
It reached nearly $60 billion last year and nearly double in size by 2020, which the study had forecast earlier.
“This channel is becoming very important,” Bruno Pavlovsky, chairman of Chanel’s fashion business, said. “Customers are spending time in airports where the environment has become increasingly sophisticated.”
The French luxury brand, the world’s second-biggest behind Louis Vuitton by sales, has boutiques in four Asian airports and one at London’s Heathrow, and this year will open a boutique in Paris Roissy Charles de Gaulle airport and another in Dubai.
Kering’s Gucci, which like mega-brand rival Louis Vuitton has suffered a slowdown in the past two years partly due to emerging market shoppers’ growing preference for logo-free products, has opened boutiques in the same locations recently.
Tourism spending is up 12 per cent worldwide since January while spending by Chinese tourists in Europe is up closer to 20 per cent, according to data from tax-refund company Global Blue.
Chinese tourists, who barely featured in luxury brands’ customer statistics a little over a decade ago, now make up 29 per cent of global luxury spending, consultancy Bain & Co. said in a report published last month.
That trend is set to continue, with Boston Consulting Group (BCG) forecasting nearly half of all air traffic in the medium term will come from the Asia Pacific versus 37 per cent now.
Though most luxury brands raised prices, particularly in the eurozone and in Japan, to make up for currency moves, Bain estimates that over two-thirds of luxury spending by mainland Chinese was made overseas in 2013, due partly to local duties.
According to Renaissance Capital, Europe remains the cheapest market for handbags with prices nine per cent below those in Hong Kong and 28 per cent below mainland China, while the yen’s weakness has played in favour of luxury shoppers in Japan.
BCG expects the Chinese travel market will grow at a compound annual rate of about 11 per cent from 2012 to 2030.
Chinese urban travellers took about 500 million domestic and outbound trips in 2012, spending about $260 billion, and it expects those numbers to increase to 1.7 billion trips and $1.8 trillion in spending by 2030.
Tags: luxury brands