For the most luxurious of retail brands, the Far East has been paved with gold. But are times changing? We asked Mark Burlton, Cushman & Wakefield’s Head of Cross Border Retail, for his take on the current shopping mind-set.
All around the high-rise flitz and bling of Hong Kong and Shanghai diamonds are losing their lustre, luxury leather stores are tightening their belts and the catwalks have started to go to the dogs. The omnipresent expensive watch retailers wish they could stop time and the hyper cars are selecting reverse gear.
The wealthy Chinese are reinventing themselves before our eyes and switching from revolution to evolution – and the luxury market isn’t happy. The goose has stopped, or at least slowed down, laying its golden eggs and it appears nobody told the retailers in their marble palaces. Add to this a revised downwards forecast of 7% growth in GDP from the ruling Communist Party and you get the impression that a few says forecasts are going to have to be revised, and not in a good way.
I love Asia in so many ways including its rather brash five-storey high shop fronts blasting their logos for brands that in London would be blocked by listed building control, conservation areas and – dare one say it – more conservative tastes.
I love the neon blast here as the sun goes down and shoppers head out after work for another hedonistic binge
But I love the neon blast here as the sun goes down and shoppers head out after work for another hedonistic binge. I love the sense of pride in what they have and if I could afford to join them I undoubtedly would.
But times have changed almost unfeasibly quickly and I think the luxury market may be about to bleed a little into its collective silk handkerchief. Sure, there is still enough money in circulation but the way it is being spent has changed. The Hong Kong shopper is now just as likely to hop on a plane to Tokyo, Seoul, Paris, London or even New York to satisfy their magpie-like desire for shiny things. Great news for those cities perhaps but pretty shocking news for the domestic luxury mall owners.
And there are more signs of changing times. The latest Barclays European Luxury Goods report shows that while the Chinese customer has grown spending in Europe at a massively respectable 33.7% year-on-year, the decline in Russian spend is an alarming 51.2% for the same period. Ying and Yalta you might say. So where are the good news stories for luxury retailers? Well they are few and far between but I would favour Europe and America over Asia right now as I believe growth will be flat in Asia at best.
So who is set to benefit? For me the answer is the ‘bridge brands’ and those purveyors of affordable luxury. Step forward Michael Kors, Jack Wills and Ted Baker. Say hello to Maje and Sandro and mingle with The Kooples. The list goes on and I predict great things for those who come to Asia in their own right rather than through partners. You will find doors open that were previously closed and you will find an emerging middle class ready to embrace your style and your sensible price architecture.
The trend is set to be repeated in the ever expanding waistlines of the food and beverage sector. Only five years’ ago mall landlords, not just in Asia, would cluster their restaurateurs in less than 10% of their sales area. This has now expanded to a portly 20% minimum and the appetite for new trends, chefs and culinary kudos is insatiable.
But signing up today’s coolest cucumber in the culinary world can be quite a gamble when your mall development is some time away from completion. All you can do is hold your nerve, travel, learn from the mistakes of others, travel and travel again.
My culinary hotspots are Tokyo (where the power of social media alone can create lines around the block for the most prosaic cupcakes), New York, London and Las Vegas (I kid you not). Vegas and similarly Dubai are incredible importers of the best in dining.
For those based outside of Asia, we look forward to welcoming you to our home markets at any time. We’ll even buy you lunch…