Despite China’s slowing luxury sales growth over the past year, a new report by real estate consulting firm CBRE finds that the country remains a prime global location for retailers’ expansion plans in 2014.
According to the survey of a retailers from a wide range of price points—encompassing everything from Old Navy to Carolina Herrera—China ranks fifth overall on the list of countries where companies hope to expand their store presence in 2014. A total of 22 percent of these retailers listed China as a main target market for new store openings, while Asian retailers in particular see China as their number one source of opportunity.
The survey also addressed the issue of Asian retailers’ slowly growing interest in moving beyond their home region. The number of those with sights beyond Asia is still limited compared to other international brands: a total of 43 percent of those from the Americas plan to open 40 or more stores globally in the coming year, while only 23 percent of Asia-Pacific retailers plan on doing the same.
“The relatively lower levels of interest by Asia Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets,” said CBRE Retail Executive Director Sebastian Skiff, “but that said, we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch New York and Australia.”
One issue to note in this report is the fact that the overall optimism about the Asia-Pacific region and China may be connected to the growth of the middle-class, as accessible luxury and fast-fashion retailers are quickly moving in on the market. Many high-end luxury retailers, however, have been slowing their expansion plans in the wake of China’s luxury slowdown in favor of store renovation.
One great frontier for luxury retailers, according to CBRE, is niche brands. “The super-rich no longer want overly ‘logofied’ product; they are more discerning in their product choice, and feeling confident with the knowledge they have, which is now on a par with their peers across the world,” says Skiff. “A growing number of consumers are now confident enough to adventure away from the ’typical’ core luxury brands, and we are seeing a great deal of interest in niche luxury product and bridge brands that make more of an individual, unique statement about the person.”