High-end department store SKP, which officially opened an outlet in Wuhan, capital of Central China’s Hubei province, on July 26, netted 100 million yuan ($13.8 million) in sales on its official launch day and has drawn in more than 100,000 visitors since a trial run on July 13.
SKP-S, the youth culture-focused luxury retail brand of SKP, also opened in Wuhan, targeting local Generation Z consumers with a selection of designer brands.
SKP is the luxury unit of Beijing Hualian Group and has surpassed London’s Harrods in terms of revenue. It has established a reputation for high revenue in luxury product sales across China’s top cities.
SKP’s Beijing store posted revenue of more than 24 billion yuan in 2022 and 26.5 billion yuan in 2023.
The store in Wuhan is SKP’s fourth, following the ones in Beijing; Xi’an, Shaanxi province; and Chengdu, Sichuan province.
Despite a rise in livestreamed shopping and e-commerce, high-end department stores such as SKP have continued to gain traction.
SKP Xi’an, which opened in 2018, reached a revenue of 9.5 billion yuan in 2022, though it declined to 8 billion yuan in 2023. Chengdu SKP reached a revenue of 5.5 billion yuan last year.
The expansion of high-end shopping centers has been steady in the country, with megastore Shenzhen Coastal City opening its second outlet in July and Shenzhen-based high-end shopping center Mixc, a unit of China Resources, launching its first store in Guiyang, Southwest China’s Guizhou province, showcasing the vitality of the retail industry.
The scaling up of high-end shopping centers has been mostly driven by demand in the luxury market.
According to the Hurun Chinese Luxury Consumer Survey released by the Hurun Research Institute in March, the total size of the Chinese luxury market is forecast to rise by 3 percent to $240 billion this year.
The luxury goods industry globally has, however, seen slower growth this year.
LVMH Group’s first-quarter revenue fell 2 percent year-on-year to 20.7 billion euros ($22.3 billion).Kering Group fell 11 percent and is expected to see a 40 percent to 45 percent decline in profits for the first half of 2024.
Hermes Group recorded growth, but the rate narrowed from 22.3 percent in the same period last year to 12.6 percent.
The decline in revenue of luxury brands has been mirrored in the commercial real estate sector.
In the first quarter of 2024, retail sales of Swire Properties’ projects on the Chinese mainland almost all declined. Retail sales of Beijing Sanlitun Taikoo Li and Beijing Indigo saw drops of 5.4 percent and 2.4 percent, respectively, while Shanghai HKRI Taikoo Hui fell 19.4 percent in sales revenue.
In contrast to the mixed picture for domestic luxury shopping, the global luxury market has benefited from a resurgence in luxury vacations by Chinese travelers.
According to the Bain & Co Luxury Goods Worldwide Market Study, released in June in collaboration with Italian luxury goods manufacturers’ industry association Altagamma, Europe and Japan have demonstrated notable resilience, buoyed by tourism inflows in the first quarter of 2024, with Japan thriving as it attracted a growing number of nationalities beyond the historical predominance of nearby Chinese travelers.
In Japan, tourist inflows surpassed pre-COVID levels, bolstered by a favorable yen arbitrage — which reached its lowest level against the US dollar in two decades.
This has resulted in a surge of tourists from around the globe, flocking to both established destinations and emerging luxury locations across the nation.
According to Global Blue, a business partner for shopping journeys, in terms of origin markets, the recovery of the Chinese mainland shoppers continues to accelerate.
Japan is currently the country benefiting the most from this acceleration. Globally, the momentum remains solid across nationalities, especially with shoppers from the Chinese mainland.
In May, in-store sales in continental Europe grew by 19 percent compared to the same period in 2023, influenced by positive dynamics across nationalities, with shoppers from the Chinese mainland leading the way with a 39 percent growth rate, according to Global Blue.