The luxury industry is eager for Chinese tourists to return PARIS: The return of high-spending Chinese tourists could sustain further growth, which is why the European luxury sector is pleased that the pandemic lockdowns in China have ended.
Before the pandemic, Chinese tourists visiting Europe were a significant source of luxury house sales.
Joelle de Montgolfier, head of the luxury division at management consulting firm Bain and Company, stated that the Chinese were responsible for “a third of luxury purchases in the world” and that “two-thirds of those purchases were made outside China.”
RBC Bank has increased its growth forecast for the sector this year from 7% to 11% as a result of their return.
In a recent note to customers, RBC Bank stated, “China reopening is one of the key’mega-themes’ for the luxury sector in 2023.”
The luxury industry was able to surpass sales from before the pandemic in 2021, despite a decline in 2020.
“The Chinese consumed, but only in China,” de Montgolfier of Bain stated.
She continued, “With unexpected confinements in the country in 2022, it was much more complicated.”
Despite this, Bain and Company’s forecast for November indicated that the industry would still grow by 22% to 353 billion euros (US$384 billion).
The surge of American tourists traveling to Europe with a strong dollar following the lockdown, as well as tourists from Korea and Southeast Asia, supported this growth.
Another pleasant surprise came from Europeans, who “had been ignored for decades… and were more interested in luxury goods than expected,” according to Erwan Rambourg, an analyst and insider in the luxury industry who wrote the book Future Luxe: What the Luxury Industry Has in Store
“MORE STAFF” Arnaud Cadart, a portfolio manager at asset manager Flornoy, stated that following the removal of travel restrictions in China, “there will be a considerable return of Chinese tourists, but that will be more likely in the second quarter.”
“A large number of people will be affected by the pandemic, which is still very active in China.”
If the number of US tourists decreases, Chinese tourists may be required.
According to Cadart, “European boutiques need this rebound in Chinese clientele to replace its American clientele, which could buy locally.”
Additionally, they must adjust to Chinese customers, who frequently travel in groups and will join a large number of tourists from the United States.
De Montgolfier stated, “They need more staff… there are already lines in front of the boutiques even without Chinese clients.” Otherwise, they run the risk of having their shopping experience “degraded.”
Another issue: It is unclear how much merchandise Chinese consumers will want to purchase. The industry prefers low volumes and does not discount to guarantee exclusivity.