The Evolution of Luxury Fashion Retailing in China

Abstract

This chapter reviews the evolution of the Chinese luxury fashion retail market over the last 25 years and the development of foreign luxury fashion retailers’ strategies in response to recent market changes. Attracted by China’s booming economy with continued double-digit growth and a growing consumer base keen on purchasing Western luxury brands as status symbols, many luxury fashion retailers entered the market and expanded rapidly. However, the recent anti-corruption crackdown, a slowing economy and devaluation of the yuan have created a volatile and challenging market. Furthermore, as consumers become more sophisticated and discerning, their preferences have changed from highly conspicuous consumption to a taste for quieter and more exclusive pieces. Adaptation of retailing and marketing strategies is necessary to take account of cultural differences and low brand awareness in the vast Chinese market. The use of flagship stores in premium locations in key cities provides luxury retailers with the means to showcase the brand as well as host PR events to educate consumers and create brand awareness. More recently, luxury retailers are building an online presence and using Chinese social media platforms to reach and engage with consumers. However, as the economic slowdown shows no signs of respite, some luxury retailers may scale back Chinese retail operations, which could provide opportunities for domestic luxury brands to carve out a market niche.