Gucci, Prada close more China outlets as consumers cut luxury spending
Store closures are also hurting mall owners and undermining projections for an end to the multi-year property market slump
Global luxury retailers are hastening their retreat from China by shutting stores in high-end shopping malls across major mainland cities, as consumers cut back on spending and analysts warn anaemic sales are likely to persist this year.
French luxury group Kering closed two Gucci stores in Shanghai last month – in Réel Department Store near the landmark Jing’an Temple and New World Daimaru on the city’s busiest shopping strip along Nanjing Road – after more than a decade at those locations. Prada ended its two-year presence at the city’s Hongqiao international airport.
They added to eight closures in the fourth quarter last year and two in the preceding quarter by all luxury retailers involving brands like Louis Vuitton, Chanel, Tiffany & Co and Bulgari, according to data compiled by industry tracker Linkshop.com.
“Most brands have seen steep declines in sales in mainland China, not only affected by [depressed] consumer sentiment at home but also by Chinese nationals shopping more abroad,” said Jelena Sokolova, a senior equity analyst at Morningstar.
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Kering and Prada did not immediately reply to emails seeking comment, while LVMH declined to comment.
To underline the urgency, Beijing prioritised “boosting consumption” as the top policy task at the National People’s Congress meeting this week. It doubled state subsidies for consumer-goods purchases to 300 billion yuan (US$41.4 billion) for this year.
