The bounce-back of Chinese tourists to London post-Covid-19 is happening slowly, with bricks-and-mortar remaining the most popular shopping destination for mainland luxury consumers.
In the UK, where the high-end tourist market is currently valued at £35 billion (323 billion RMB), brands are zeroing in on their relations with China. According to a new report by The Business of Fashion Insights, mainland consumers are on track to spend $131 billion on luxury per year by 2027.
Covid-19 altered consumer behaviors, thus businesses are being forced to evolve in response. The Walpole State of London Luxury report 2023, for example, found that the biggest change for high-end shoppers was how they are now driven to shop in store purely to be able to interact with items physically, which was not a priority pre-pandemic.
This new luxury shopping behavior, along with the widespread urge to re-engage with returning Chinese tourists, makes now a pivotal moment for London’s leading retail businesses.
Taking London to China#
Back in 2017, Shaun Rein, founder of Shanghai-based consultancy China Market Research Group told the Financial Times: “If you were to have Harrods in China, it wouldn’t work.”
Yet, by 2020, Harrods had opened a store in the Pudong district, dubbed ‘The Residence,’ to great success despite the pandemic. It launched a second location in Beijing in 2021. Now, Harrods has opened a first-of-its-kind member's club in Shanghai, kitted out with Michelin-star chefs and exclusive products.
In 2017, it was news that Chinese shoppers overtook Brits as the biggest spending consumers at Harrods, and by 2022, Chinese customers contributed 16 percent of the luxury department store’s overall sales. This focus on the market beyond its physical London location is key to establishing long-term relationships with these high-spending consumers.
Introducing famous British chef Gordon Ramsay to the market as part of the hospitality offering, Managing Director at Harrods Michael Ward tells Jing Daily, "We are moving with the times and our restaurant strategy is a fundamental part of this offering. Now, Harrods is also about fine dining, and getting people to think of us beyond traditional retailing. That's what brings you into that real premium sector."
On Clifford Street, in London's bustling Mayfair shopping district, high-end tailor Cifonelli London is also expanding beyond classic retail to meet the needs of its Chinese consumer base.
Cifonelli CEO Lionel Peralta says that trunk shows and events have become a crucial vehicle to connect with Chinese consumers.
"Since the pandemic, visitors into the store from mainland China have slowed. But we hope to reconnect via trunk shows over the next few months. We are catering to them through rare events, as well as through personal shoppers and stylists, connecting via WhatsApp,” Peralta says.
Close communication#
Chinese consumers are inquisitive when shopping luxury, and exhibit a high awareness of fabric manufacturing and quality, says Peralta. In Cifonelli’s case, that’s particularly true of silk and knitwear. This, combined with this cohort’s tech-savviness, makes highly efficient customer correspondence crucial.
As in China customer service is available 24/7, consumers expect a similar level of service from sales associates in London.
"Sometimes, as soon as our Chinese consumers receive a WhatsApp message about a product, they will buy it immediately," says Peralta. "Our customers from China will actually make requests via WhatsApp. Whereas our European clients are more reluctant in that kind of approach."
For Harrods, there is similar prioritization of the communication strategy in both its China and UK business. For instance, the recently-opened Residence has a new WeChat mini-program dedicated to community correspondence.
Focusing on China’s youth#
In comparison to other markets, China’s luxury consumer is notably young. According to Alliance Bernstein’s Global Luxury Goods: Insights from the Road in post-Covid China report, this is partly down to the nation’s one child policy (relaxed from 2015), which resulted in millennial and Gen Z consumers inheriting more assets.
This younger consumer has to be at the forefront of London retailers’ approach to engagement as Chinese shoppers return.
Harrods’ new members club The Residence Shanghai is seen as a separate business to that of its London business. For example, Ward describes the strategy as far more playful. “If you look at the colors and the difference in how we relate to people with emojis, we use WeChat as a more useful experience, whereas the UK sees a more standard policy," he says.
London’s Cifonelli store has not only hired a new, young social media manager to cater to its Gen Z clientele, it has also been exploring more product categories and price points.
In contrast to its usual tailored offering, Cifonelli’s new Varsity jacket reflects a new styling — within three days, it had achieved a 50 percent sell through rate.
Peralta continues: “You have to make the difference on a design level for younger customers who desire a lot more offering, and are way more inquisitive about fashion in general. This is where we are working really hard at Cifonelli, because there is a need to be a contemporary and relevant brand even though we have been around for over 140 years.”