Luxury brands have entered an age where they are vying to achieve digital firsts. Burberry became one of the first brands to engage in luxury livestreaming this March, and now it has become the first to open a social retail concept store. The performance of this ground-breaking store will not only determine whether the concept could become a growth investment for the brand across China but, as with livestreaming, other luxury brands are waiting to see if this new platform will be worth the investment.
The store opening comes as China relaxes more of its stringent lockdown measures, and as Chinese consumers, who have endured months in quarantine, are engaging in some much-needed revenge shopping. Meanwhile, Tencent’s Shenzhen headquarters inside the MixC mall might be the perfect choice for Burberry. The income level of Shenzhen residents has skyrocketed over the past two decades as the city has moved up the industrial value chain (the rise of Shenzhen-based Tencent, Huawei, and the drone-maker DJI has been a big part of the city’s success.) Shenzhen’s GDP per capita doubled over the last 10 years, topping the chart of all Chinese cities with $29,498 last year.
But historically, Shenzhen has never been a popular choice for luxury shoppers, given its close proximity to Hong Kong. A 2014 report by commercial realtor CBRE pointed to this as the main reason for the city’s lack of luxury brands. But, now that Hong Kong’s luxury retail market has been stunted by protests and COVID-19, new concept stores might be able to win the attention of both locals and neighbors from the nearby affluent city of Guangzhou.
MixC Shenzhen Bay opened its doors in 2004 but didn’t attract luxury brands until its second phase opening in 2009. Since then, brands like Louis Vuitton, Hermès, Christian Dior, and Cartier have opened shop, and the mall has been a beacon for the group remaining its top earner of rent revenue.
Burberry began working on this project at the beginning of last year, said Zhang, which was long before the brand’s COO and CFO, Julie Brown, announced Burberry’s $255 million (£195 million) savings plan in the aftermath of the pandemic. Therefore, one must wonder if, in the current business environment, would Burberry be able to allocate follow-up funding for more social stores, even if other brands are encouraged by their results?