Where would the luxury world be without the glittering glass fronted stores on Paris’s Champs Elysees, the gold signs over New York’s prestigious Fifth Avenue and the Rolex and Christian Louboutin boutiques on Milan’s Via Monte Napoleone? There seems to be no doubt that when it comes to making the luxury world work for your product the focus has to start in the cities. The fast facts and figures are already scrawled across the internet telling us that no less than a staggering 85% of the luxury market growth will come from the world’s top 600 cities.
We all know the sprawling luxury metropolis names of London, New York, Paris and Milan but some other major players will be emerging from the shadows and accounting for much of the growth before the calendar ticks over to 2025. Unsurprisingly many of these cities can be found on the far eastern shores of China with Beijing, Hong Kong, Guangzhou, and Shenzhen leading the parade.
China is growing to become one of the leading consumers of luxury with a penchant for authentic brands and designer goods. According to Bain & Company, Chinese consumers spend over three times the amount abroad then they would spend at home. China is set to drive half the growth in the luxury industry which is why it’s essential for brands to turn their eyes to the east. The affluent Chinese market doesn’t only hold power over retail, sure elite Chinese travelers will love to swipe their platinum cards in the stores of Prada and Chanel but tastes are changing and they will want exclusive experiences outside of the shopping environment. Wealthy Chinese households aren’t succumbing to our idea of a recession, in fact they are only getting wealthier and the more they accumulate, the more they are looking to travel and the more they are looking to spend.
Yet even closer to western shores the dizzying height of spending seems to be led by countries like the USA, Italy and France with tourist luxury spending adding its weight to the bulk of the figures. One quick glimpse at the leading locations where tourists like to splurge takes us back to the cities. From chic weekend shopping trips in New York to European jaunts to Paris, Milan and London there’s no doubt that affluent visitors love to splash the cash in the major city hubs. It’s also essential to note that many of the world’s billionaires are also entrepreneurs who globetrot for business. The major financial haunts are often to be found in bustling cities and when these affluent city slickers step off their private jet they will be seeking high end retail for spending within the city limits.
Different cities have different draws and this will impact a luxury brands choice when it comes to which city is the best to focus on. The fashion capitals of New York, Paris and Milan clearly put their best foot forward when it comes to apparel yet skincare hits the top of the charts when it comes to Asia. Investors should note that the mature cities of our present luxury scope aren’t slowing down, only there seems to be more emerging cities joining the trend.
Forbes has noted that there seems to be a stronger affiliation to keep strength and investment in more western cities from many luxury brands, yet the resources needs to follow the growth. Companies must be willing and ready to send the best of their best to the places where the growth patterns are emerging. It also helps to have a firm footing with a good local partner or affiliate in the far flung cities so that you don’t go charging in without understanding the hurdles of how to conduct business on foreign far flung shores.
Mega cities are the future of luxury and no longer is this limited to old world Europe and the billion dollar mansions of the United States. China, the Middle East, Brazil, India all these places are on the rise and if luxury brands are successfully able to sweep their marketing towards these shores then we can all ride on the crest of this new world wave.
If you are interested in more details, download the McKinsey & Company report at http://mckinseyonmarketingandsales.com/sites/default/files/pdf/LuxuryScope.pdf
Roxanne is the Co-Founder of LuxeInACity and AgenceLuxury. An Avid sailor and traveler she stumbled into luxury in 2005 while working aboard superyachts. Since then she has been a private concierge for UHNWI and has helped several luxury brands with their digital needs.