United Strength
Although Chinese consumers remain incredibly important, the United States should not be overlooked. In 2014, 74% of Luxury CEOs cited U.S. growth as having the most positive effect on their business, an increase of 16% from 2013. Chinese growth was cited as being the second most positive factor.
Whilst New York remains a key hub for luxury brands, other key US cities including San Francisco, Dallas, Houston, Atlanta and Washington are being primed for luxury growth. Together, these five cities represent 20% of the UHNW population in the United States.
Rapid wealth creation, primarily driven by the tech and energy sectors, is driving luxury growth in these cities and many luxury brands are increasing their brand footprint through new flagship stores. At the end of last year, Chanel opened their refurbished larger store in Houston; in Dallas, Jimmy Choo doubled the size of their store whilst Hermès refitted their store to appeal to a growing consumer base.
Not only is growth being driven by domestic spending, the US is becoming an increasingly appealing hub for wealthy Chinese individuals who seek not only a “safe” haven for their wealth in property but to provide an American education for their children.
In 2014, Chinese real estate buyers, for the first time, were responsible for more sales in the US than any other non-US group, closing on 16% of the 209,000 homes sold in that period; up from 9% of sales transactions the previous year (National Association of Realtors). The country’s EB-5 visa programme also saw record applicant numbers from China in 2014.
Experience Coupled With Unique Products
The potential exists for luxury brands to capitalise on the increasing outbound flows of Chinese consumers. Shopping in luxury capitals such as Paris and Milan is an experience in itself for many Chinese tourists.
However, combining an element of education around product origins will also further sales; having a story to tell to their peers about the history or craftsmanship involved in a certain product will go a long way in product promotion.
Similarly producing unique products which are only available in certain countries is another way to enhance the exclusivity of a product, demonstrate status and ultimately promote sales.
