Despite Lagging Demand For Watches, China Remains Brand's Highest Growth Region#
Chinese shoppers wait outside an Hermès store in Hong Kong. (Bon Brand)
In the midst of a global economic slowdown and unfavorable currency effects in Europe, French luxury goods company Hermès reported today that China's market was its most dynamic area of growth in its 2013 first-quarter report.
As with many other luxury brands this year, the company's worldwide market as a whole is not growing as quickly as it was last year. The Wall Street Journal reported that the label's overall 10 percent rise in sales compared with last year marked its slowest pace of growth since 2009. However, non-Japan Asia (including China, Macau, and Taiwan) saw a 17 percent increase, making it the company's highest region of growth by a margin of 6 percent. This number was brought down by a dip in Chinese demand for watches, which has been significantly lower for luxury brands across the board.
According to a Financial Times report, Hermès is particularly inclined to benefit from the increasing appeal of "stealth wealth" in China thanks to its focus on more understated luxury products. The brand's growth rate has been contrasted with that of comparatively logo-heavy Louis Vuitton, whose sales growth dropped at a much higher rate for the first quarter.
The importance of Chinese consumers to the brand's sales numbers is not fully reflected in the 17 percent growth rate, which accounted only for Hermès sales taking place in the region. When counting Chinese tourists shopping abroad, the group comprised 30 percent of the company's worldwide sales last year.
As with several other brands in the wake of the slowdown, the label's strategy for 2013 has been to cut back on store openings and focus instead on renovations and extensions of certain divisions such as homeware.