Is it the year of the ram? The goat? The sheep? One cannot be sure as countries throughout Asia come together next week to begin to celebrate variations of the Chinese Zodiac for one of the continent‘s largest holidays: Lunar New Year.
From February 19 onwards, families will celebrate auspicious beginnings and the past year‘s accomplishments, while sharing food and drink and of course, exchanging high-end gifts. It has been said that 25% of all luxury goods bought by Chinese consumers are either a form of personal or business gift and so, alongside the sound of fortune cookies breaking across the globe, luxury retailers can expect to hear cash registers ringing.
“Retailers across the UK are set to benefit from an influx on international shoppers for Chinese New Year,” comments Gordon Clark, Country Manager UK and Ireland at Global Blue.
According to our research, Chinese shoppers flock to global powerhouse brands such as Louis Vuitton, Chanel and Dior where items are as much as 30% less in the UK due to high luxury taxes at home, even before the added benefit of Tax Free Shopping. China retained its title as the top spending nation in the UK in 2014, and growth is expected to continue this year. The UK China Visa Alliance‘s ongoing campaign to facilitate the visa application process for Chinese visitors, and the work of the ‘Let Britain Fly‘ Campaign to gain agreement from the UK Government to add an additional runway at a London airport, will both aid visitors‘ travel, so retailers should be ready to welcome them with Tax Free services, UnionPay and cultural training for staff to provide a superior welcome when they get here.”
Over the Lunar New Year period last year, spend from Chinese shoppers grew by 9% YOY (February 2014) with Chinese shoppers‘ transaction values averaging at £765. This is expected to increase next week because China led international spend overall in 2014, representing 25% of total spend and seeing 6% YOY growth for the year. As a response to these positive figures, luxury brands are not only introducing products to welcome Chinese shoppers and maximise spend, but are also introducing services such as tax free shopping, cultural training for staff and UnionPay payment.
A longstanding tradition at Lunar New Year is the sharing of ‘hong bao‘: red envelopes full of lucky money for the recipient. This custom of gift giving is one that many a luxury brand has capitalised on, especially in recent years, which demonstrates involvement in the celebratory nature of the holiday, engendering good will and signaling cultural understanding.
The Chinese favour luxury
It is becoming increasingly important to look after the Chinese customer. A recent report from HSBC has found that Chinese tourists will be the biggest driver of luxury growth in the coming years, and their spending will move increasingly beyond Hong Kong and Macau and push further into Europe, Australia and the U.S
The study, titled ‘Globe-trotting shopper‘, cites that 1 in 3 global luxury sales is made by a Chinese customer, and around two thirds of that customer‘s spending is overseas.
As opposed to building more stores in China, HSBC is urging luxury companies to consider better catering of the Chinese shopping abroad, this through improved service, more attentive staff and, in France at least, more shopper-friendly hours.
According to HSBC, Moncler, Burberry and Richemont are among the companies poised to benefit from the traveling Chinese.