Luxury retailers across the world are rapidly withdrawing from China, closing stores in high-end malls across major cities. This comes as consumers reduce spending, and analysts predict sluggish sales will continue throughout the year.
French luxury group Kering closed two Gucci stores in Shanghai last month – one in Réel Department Store near the landmark Jing’an Temple, and another in New World Daimaru on the city’s busiest shopping street, Nanjing Road – after more than a decade at those locations. Prada ended its two-year presence at Shanghai’s Hongqiao International Airport.
These closures follow eight others in the fourth quarter of last year and two in the preceding quarter by various luxury retailers, including brands like Louis Vuitton, Chanel, Tiffany & Co., and Bulgari, according to data compiled by industry tracker Linkshop.com.
Most brands have seen steep declines in sales in mainland China, affected not only by depressed consumer sentiment domestically but also by Chinese nationals shopping more abroad, says Jelena Sokolova, Senior Equity Analyst, Morningstar.
To emphasize the urgency, Beijing prioritized ‘boosting consumption’ as the top policy task at the National People’s Congress meeting this week. The government doubled state subsidies for consumer-goods purchases to 300 billion yuan ($41.4 billion) for this year.
