What Happened: According to China Retail News, the chain of French department stores Galeries Lafayette signed an agreement with HLC Commercial Estates Group in Guiyang to open a store in Guiyang’s Dolphin Plaza.
Jing Take: Luxury European brands understand that there’s a strong need to adapt and revise the industry if they want to survive in the new post-COVID-19 reality. With internal consumption in Europe still inhibited by the ongoing pandemic and border and travel restrictions keeping affluent Chinese tourists away from European capitals, the luxury-goods industry has taken a severe hit during 2020.
Increasing one’s retail footprint in a strategic market like China is a brilliant move because of the repatriation of wealth and the growing domestic luxury consumption in the country.
“We are going to see a relocation of investment away from some of the more mature markets and see a reinvestment in the Chinese market because of the surging consumption there,” said Joëlle de Montgolfier, the executive vice president of global consumer products, retail, and luxury practices at Bain & Company, to Vogue Business.
Meanwhile, the company’s location choice of the tier-2 city Guiyang, which has had “an outstanding performance in growth of jobs, wages, GRP, and FDI,” proves Galeries Lafayette has noticed that the real growth wave is happening in lower-tier markets, where luxury purchases are more frequent, and consumers are more loyal to brands, thanks to less store footfall.
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.