Luxury stores downsizing in China as shoppers move online

BEIJING - Market trackers say e-commerce is dramatically changing the face of upscale shopping in China, which is home to more consumers of luxury products than another country. Caixin describes the trend as a “one-two punch that has retail stores reeling”, with companies selling 83% of all high-end brands available in China downsizing their storefronts last year.

Market tracker Fortune Character, which released the data, said this percentage downsizing will likely rise to 95% in 2016. In terms of the effect this is having on the overall industry, an October report by US consultancy Bain & Co. predicted the USS275 billion industry would end 2015 with just 2% growth in overall sales, a decrease from 3% in 2014 and the most meagre expansion since 2008.

Fortune Character added: “In addition to e-commerce competition…stores are feeling the heat of the cooling economy, an increasing number of shoppers who buy upscale brands directly from overseas retailers through the Internet and while travelling abroad, and the Government’s three-year-old campaign against official gift-giving. Tax policies are also affecting shopper habits.”

Louis Vuitton closed seven stores in China last year, following previous shutdowns by Prada and Hugo Boss and the downsizing of Burberry’s flagship store in Hong Kong. www.webershandwick.cn (ATI).