Wushang sales show new luxury goods trend

Wushang Group, the Wuhan, Hubei province-based retailer and shopping mall operator, said both revenue and footfalls surged during the recent May Day holiday.

The surges were visible not only at its stores in Hubei province in Central China but at its newly opened store in Nanchang, capital of Jiangxi province in East China. This heralds an emerging market for luxury goods beyond first-tier cities, industry experts said.

In all, 13 shopping malls and 107 supermarkets of Wushang across China clocked double-digit growth during the five-day break in China that began on April 29.

On the first day of the holiday, Wushang's mall in Wuhan saw revenue jump 100 percent year-on-year, with long queues outside outlets of international luxury brands such as Louis Vuitton and Cartier.

Wushang's mall in Nanchang, the city's first luxury shopping center that opened on April 28, attracted more than 900,000 local people during the holiday, with total spending exceeding 70 million yuan ($10.11 million).

In 2022, in Jiangxi province, home to more than 45 million registered residents, per capita disposable income among urban residents was about 43,000 yuan, according to the provincial government.

Leading international brands including Versace, MaxMara and Chloe posted strong sales performance in such areas, with sales of Qeelin and Coach climbing to their regional highs.

More than 20 high-end beauty brands sold 4.5 million yuan worth of goods on the first day of the holiday. Top luxury watch brands such as Jaeger-LeCoultre and Tudor proved popular among local consumers, said the group.

Zhong Ziqin, deputy general manager of Wushang Mall, said: "Our sales have been exceeding expectations. Consumers in Jiangxi province have the spending capacity as well as a taste for luxury goods, with special interest in niche high-end brands. The future of luxury business is in lower-tier cities."

Proof of this trend can be found in the return of white-collar consumers from top-tier cities to their hometowns in third- and fourth-tier cities after the COVID-19 pandemic.

"They feel less pressure in their hometowns, have more disposable income now, and have developed a new vision for life as well as a taste for luxury goods, having lived in top-tier cities in the past," Zhong said.

"Luxury brands we work with value the Chinese domestic market and have great confidence in its bright future."

According to consultancy Bain &Company, compared to other emerging markets, China is a behemoth in terms of scope for growth of the luxury goods market. It has a larger number of middle- and high-income consumers, and those groups are projected to double in number by 2030.

"Luxury consumption will recover once COVID-19 subsides, mall traffic improves and consumer sentiment rebounds. We expect to see 2021 sales levels sometime between the first half and the second half of 2023," said the Bain report.

Luxury consumption in China's domestic market is on the rise, given the shrinking price gap between overseas markets and the domestic market, and deeper understanding of luxury goods among the younger generation of consumers, said Zhong of Wushang group. "Price no longer matters the most, but the appeal of the designs and styles does."

Luxury shopping malls need to catch up quickly with local consumers by offering differentiated services for the benefits of long-term operations, he said.

In tune with the trend of luxury consumer shift to lower-tier cities, Florentia Village, which currently operates seven outlets in major cities including Tianjin, Shanghai and Guangzhou in Guangdong province, is working with more than 1,200 stores and over 300 brands. Florentia entered the Chinese market in 2011.

"Luxury retail has great potential in China and we are very optimistic about the market here," said Jacopo De Vena, managing director of Florentia Village and RDM Asia.

The shopping mall operator started in first-tier cities and has since expanded to emerging first-tier cities and second-tier cities such as Wuhan in Hubei province, Chengdu in Sichuan province and Chongqing on the back of China's rapid economic development in the previous decade.