Luxury spending continues to rise as younger consumers' spending grows

Luxury outlet operator Value Retail's chief executive officer Desirée Bollier said the company plans to start their next phase of expansion early next year. 
Ti Gong

The Shanghai Village in the Shanghai International Tourism and Resorts Zone

Luxury outlet operator Value Retail, which operates the Shanghai Village outlet near Shanghai Disney Land, plans to start their next phase of expansion early next year, chief executive officer Desirée Bollier said. 

The luxury outlet operator said it's seeing double-digit growth in both Europe and China, and comparative sales globally are also up 35 percent this year.

The Shanghai Village, which was opened in the Shanghai International Tourism and Resorts Zone last year, has seen “high double-digit growth”.

"We're extremely pleased with the business performance as well as the average transaction per visitor," Desirée Bollier, chief executive of Value Retail, said in an exclusive interview with Shanghai Daily earlier this week.

The company didn't reveal how many retail units will be added to the existing 100-plus stores in phase one of the Shanghai Village, but said that Suzhou Village and Shanghai Village both attract over 22,000 customers daily on key holiday days.

The luxury market is seeing a rebound in recent years thanks to a stronger yuan and upbeat consumer sentiment. 

Chinese consumers' spending on luxury goods is expected to reach 2.7 trillion yuan by 2025, with 1 trillion yuan added over the next nine years, which will account for 44 percent of the total global market, according to a McKinsey research report.

"Judging from the response to luxury brands, business sentiment and performance are becoming more stable and continue to rise," she noted when asked about the general climate of retail sales.

"We are seeing strong growth in our Villages, much of which is driven by younger consumers who are purchasing for themselves, rather than in the past when gifting played a larger part of luxury retail in China."

Bollier didn't rule out the possibility of considering new geographic locations besides Suzhou and Shanghai that meet its criteria, but didn't elaborate on specific plans.

Most of the company's work in China currently consists of upgrading existing assets, re-merchandising phase one of both the Suzhou Village and the Shanghai Village, as well as finalizing occupancy in phase one in Shanghai, and would starting negotiations for leasing in the second phase in February next year.

The second phase of the Suzhou Village is also set to open in October 2019, consisting of roughly 85 units on top of the 135 existing ones in the first phase, and it would also start to optimize and upgrade the brand mix to better meet customer demand.


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