What Happened: On February 28, the Sichuan Chain Business Association (SCCBA) released the 2022 financial performances of major malls in the province. Chengdu IFS and the Sino-Ocean Taikoo Li Chengdu claimed the top two spots, with each of them having sales revenues of over $1.16 billion (8 billion RMB), although exact figures have yet to be disclosed. They were followed by Chengdu Mixc’s $780 million (5.4 billion RMB) in third place.
The Jing Take: The performance of the luxury malls in 2022 were in fact weaker than that of the previous year due to a number of factors, including COVID lockdowns and declining consumer sentiment at the time. In 2021, SCCBA reported that Chengdu IFS and Sino-Ocean Taikoo Li Chengdu each saw revenue of around $1.45 billion (10 billion RMB) compared to 2022’s $1.16 billion (8 billion RMB). Notably, the Gucci boutique at Taikoo Li Chengdu recorded the highest revenue among all the label’s global stores in 2021.
The drop in revenue is understandable given that stringent COVID lockdowns took place all across China for much of 2022. Now, with Chinese consumers flocking to shopping malls again, Chengdu IFS and Taikoo Li Chengdu have ample reasons to be confident that they can reclaim or even surpass their performances in 2021. Indeed, Linkshop recently reported that the average number of daily visitors to the 5,000-plus malls it monitors reached 16,000 in January, a 36.1 percent year-on-year increase. During the 2023 Chinese New Year, long queues formed outside luxury stores across the nation.
Moreover, the Chengdu government has pledged to further support the city’s retail sector. In 2022, Chengdu had a retail revenue of $131.6 billion (909.7 billion RMB), a 1.7 percent year-over-year decline. In its 2023 work report, the city set a target to increase its retail revenue by 8 percent this year and announced multiple measures to attract more visitors.
At the same time, it should be noticed that this Southwestern Chinese luxury market has become increasingly saturated. In early January, Chengdu SKP, the largest sunken-style luxury mall in Asia, meaning that 99 percent of the building is 30 meters below the ground, opened. It attracted about 1,300 international brands, with 222 of them entering Sichuan for the first time.
Given the fierce competition, it is still too early to tell which of the three malls will take the top spot in Sichuan and what their respective national ranking will be in 2023. Luxury brands will also need to balance between continuing to invest in this fast-paced market and expanding into lower-tier cities. Nevertheless, with the Chinese economy showing strong signs of recovery and boosting domestic consumption as a key national priority, Chengdu is poised to make a bigger splash in China’s luxury retail scene post-pandemic.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.