China Lockdowns Dent Luxury Spending, Brands Look Beyond Pandemic – WWD

China’s fashion and luxury market has had a rough year.

Waves of strict lockdowns throughout 2022, notably a two-month one in Shanghai, wreaked havoc on fashion spending.

In the six months ended June 30, LVMH Moët Hennessy Louis Vuitton said it saw strong profits in Europe and the US but suffered “severe double-digit declines” in China.

Kering Group, whose sales rose 23 percent year-on-year in the first half, concluded that the Chinese market was “improving but still unstable” after strong global retail performance offset second-quarter losses in China.

Compagnie Financière Richemont’s jewelery division grew more than expected in the first half to September 30, but also saw double-digit sales declines in China.

Swiss watch exports to China, the sector’s second-largest market, fell 18.1 percent in the first 10 months of 2022. Hong Kong saw a 5.5 percent decline in the period.

Chanel posted negative double-digit growth in April in mainland China, where five of its 16 stores were closed and 35 perfume and beauty stores – equivalent to roughly a third of the chain – also closed.

Workers wearing protective gear clean windows outside a closed shopping mall, May 30, 2022, in the Jing'an district of Shanghai during the Covid-19 coronavirus lockdown.

Workers wearing protective gear clean outside windows of a closed shopping mall during the COVID-19 lockdown in Shanghai’s Jing’an district in May.

AFP via Getty Images

The Chinese government did not ease the lockdown measures until thousands of people began protesting in late November.

By December, China had dropped most of its rules on mass COVID-19 testing, a tracking and tracing system, and quarantines. Some observers believe the nation could be fully open to the world by spring as the government ramps up steps to relax the lockdown.

This mentality Bain & Co. and it is an echo of an announcement from the “Global Market Study of Luxury Goods” by Altagamma. He said that while China remains below 2021 figures, it is expected to recover in the first and second half of 2023.

The report predicts that by 2025, Chinese spenders will account for 40 to 45 percent of total consumers of personal luxury goods. But while they will eventually return to traveling to international destinations, they will still account for 25 to 27 percent of luxury purchases. Made in mainland China.

Prada fashion show in Beijing

Prada fashion show in Beijing.


Even amid the lockdowns, those brands that were well prepared for the situation came out stronger, while some made an effort to strengthen their presence in the market.

Prada and Louis Vuitton both managed to repeat their runway shows amid the strained COVID-19 regulations and both delivered big results in terms of media traction and online engagements.

In August, Prada hosted the brand’s fall 2022 men’s and women’s collection show at Prince Jun’s Mansion, a traditional Chinese-style courtyard hotel in downtown Beijing that was the residence of Prince Jun of the Qing Dynasty.

Echoing the original Milan shows, which featured celebrities such as Hunter Schafer and Kyle MacLachlan, the Beijing production featured some of China’s most famous film stars, such as Liao Fan, winner of the Silver Bear for Best Actor at the 64th International Film Festival in Berlin. Festival, and Kara Wai Ying Hong, three-time winner of the Hong Kong Film Award for Best Actress.

The restored show featured 51 looks with slightly altered styling and some added pieces. The event was broadcast on social media platforms Weibo, Douyin, and Tencent Video, garnering more than 92.7 million views.

Louis Vuitton Men's Spin-off at Aranya.

Louis Vuitton men’s spin-off show in Aranya.


Louis Vuitton’s spring 2023 men’s repeat show at Aranya Gold Coast, a resort town in Beidaihe, a two-hour train ride from Beijing, near the beach resort frequented by China’s party elite, helped the brand set a new record.

The show was streamed on eight platforms, including Weibo, Douyin, Kuaishou and Dewu, China’s StockX, and attracted more than 278 million viewers online.

Building on the “enlarged playground” concept unveiled at the brand’s Paris men’s show last June, Vuitton swapped an enlarged toy track that took more than two weeks to build for an enlarged sandscape.

But these weren’t the only two brands doing well. Top players such as Hermès and Brunello Cucinelli also had a good year in China.

Over the summer, Hermès drew crowds to its new store in Wuhan, the capital of China’s Hubei province. According to reports from Xiaohongshu, a long line formed outside the store to buy the bags requested by high-income people in the city. One user revealed that the brand raised about 30 million renminbi, or $4.5 million, on its opening day, citing local sources.

Hermès store in Wuhan's Heartland 66 mall

Hermès store in Wuhan’s Heartland 66 mall.


The store opening continued the streak seen by Hermès throughout the year. The group reported that Asia outside Japan had a very strong showing in the third quarter, up 33.7 percent, as retail trade held up demand in Greater China despite temporary lockdowns in Macau, Chengdu and Dalian over the summer.

Analysts at Barclays said the figures were “very encouraging”, noting that sales in China were mostly organic, meaning they were unrelated to the brand’s price increases, and showed continued strength in the region.

Meanwhile, Cucinelli’s CEO Luca Lisandroni said 2022 was a “good year” in China, where the company has strengthened its positioning, especially in large cities with a limited digital presence. China accounts for about 13 percent of total sales and half of the brand’s Asian business.

“Ready to wear has become more important and customers are much more sophisticated,” said Lisandroni. “They are looking for items that are more international in terms of taste and of high quality. It has been a great development, and we believe that China remains the main growth engine of the luxury industry.’

A woman and a man walk in a quiet shopping mall where shops are closed, on May 13, 2022 in Beijing, China.

A woman and a man walk in a quiet shopping area in Beijing during May when shops have been closed.

Getty Images

While super brands are gaining ground, players in the affordable luxury and contemporary space continue to struggle.

Some of them had to close their Chinese operations completely, unable to cope with the losses, such as American Eagle Outfitters, Trussardi and Inditex’s Bershka, Pull&Bear and Stradivarius.

In the second quarter of 2022, Capri Holdings Ltd., the parent company of Versace, Jimmy Choo and Michael Kors, had a sharp decline in the teens on a net basis and a slight decline in dual currency in mainland China.

John Idol, president and CEO of Capri, said he was “very pessimistic” about the situation. “We’ve been one of the companies saying it’s going to be a long time and we don’t think there’s going to be a recovery in China until 2024,” he added.

At Tapestry Inc., the parent company of Coach, Kate Spade and Stuart Weitzman, sales in China fell 11 percent last quarter. The company expected “weaker revenues” in North America and Greater China for fiscal year 2023, which should be offset by “remaining performance” in the rest of Asia and Europe.

Farfetch and Adidas were also highly exposed to the bear market in China.

At Farfetch, China was in double digits. President Vladimir Putin’s shutdown of operations in Russia following the invasion of Ukraine also cost the company 7 percent of its Marketplace business. Russia and China were two of the platform’s three biggest markets last year.

Adidas has been in a lot of turmoil in China since the Xinjiang cotton controversy gripped it, with all of its local brand ambassadors cutting ties with the brand. Sales in China have been depressed all year.

In the first quarter, revenue from China fell 35 percent and this double-digit decline has continued in the second and third quarters. Analysts have suggested that Adidas’ business in China may never return to previous levels.

People walk in a shopping mall on June 7, 2022 in Shanghai, China.

People walk in a shopping mall in June in Shanghai.

Getty Images

Although Bain’s annual China luxury report warned that China’s domestic sales growth of personal luxury goods would slow further in 2022, a number of brands took chances in China this year.

Brands backed by Sequoia Capital China, South Korean fashion brand We11done, Alexandre Mattiussi’s Ami Paris and Norwegian Holzweiler were particularly active in the market.

Samuel Ross’s fashion company A-Cold-Wall unveiled its first standalone store worldwide in Sanlitun, Beijing in July. Another Tomorrow-backed retail project launched in early September, Machine-A Shanghai, the international debut of the London-based multi-brand concept.

Alaïa opened its first Chinese store in the basement of the upscale Plaza 66 mall, while Zimmermann, Ambush and Rick Owens opened their first Chinese stores earlier this year in Shanghai’s luxury shopping destination Taikoo Li Qiantan.

Renzo Rosso’s OTB also doubled China. In July, he opened flagship stores for Maison Margiela, Jil Sander, Marni and Amiri in Shanghai’s JC Plaza. The location is the first Chinese store for both Jil Sander and Amiri, and Maison Margiela’s largest store in the world.

Dior pop-up in Zhangyuan

Dior pop-up in Zhangyuan.


Brands have also planned for 2023 in the hope of a big rebound. In Shanghai, the reopening of Zhangyuan, a historic shikumen building transformed into a Covent Garden-style retail complex, has already attracted tenants such as Moët et Chandon, Vacheron Constantin, Bulgari, By Far and Blue Bottle Coffee.

Dior launched a Christmas-themed pop-up in Zhangyuan, while Louis Vuitton hosts a patio set dedicated to its Objets Nomades furniture collection. The expansive space, a world first, is available to Vuitton’s VIP customers.

In the southwest retail hub of Chengdu, Louis Vuitton opened its third home at Sino-Ocean Taikoo Li in Chengdu earlier this year with a restaurant called The Hall, offering seasonal menus with European flavors.

The opening of SKP Chengdu on Tuesday was meant to draw more attention to the city. Described by Chinese netizens as a “palace-like underground world”, the sunken plaza-style luxury retail destination has already attracted the likes of Louis Vuitton, Dior and Prada to open their third or fourth stores in the city.

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