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tiffany Samsonite trumps LVMH as China

Samsonite trumps LVMH as China retail moves downmarket

HONG KONG (Reuters) The world’s biggest luxury brands are slowing their expansion in China as more consumers shop abroad, leaving mall operators holding the bag.

Two thirds of high end retailers missed their targets for new store openings in China last year, according to an analysis of 43 retailers published by development and design consultants Knight Frank and Woods Bagot.

The shift reflects a government crackdown on lavish gifts, a growing preference among many Chinese to take advantage of lower taxes and buy their luxury goods abroad, as well as an emerging middle class looking for affordable brands. Last year, the luggage maker opened 200 new outlets in China. This year, the target is 500.

“Before it was like we were unwanted people, illegitimate brands. They needed the luxury brands,” said Ramesh Tainwala, Samsonite’s president of Asia Pacific and Middle East. “The equation is changing.”

Tainwala said he is now getting prime spots in department stores near Qingdao in eastern China and Urumqi in the northwest places that would have relegated him to the luggage department just a year ago.

For developers who thought China would never tire of luxury, it could be a $25 billion misc tiffany alculation.

James Hawkey, an executive at commercial property services group Cushman Wakefield, estimates that up to a quarter of the 700 malls, department stores and outlets currently under development in China’s top 30 cities could fail, costing developers as much as 150 billion yuan.

“The mid market retailers are expanding fast, but they are not expanding fast enough to fill all of the shopping centres,” Hawkey said.

Concerns about authenticity and domestic taxes that can top 40 percent have long lured wealthy Chinese to shop overseas. Now, easier visa requirements and a growi tiffany ng appetite for new experiences pushed the number of outbound Chinese travellers to 100 million last year, a 20 percent increase from 2012.

Brokerage CLSA forecasts the number of Chinese travelling overseas will hit 200 million by 2020.

Burberry, which has hired Mandarin speaking sales associates globally, has 72 stores in China and will open its largest st tiffany ore in the Asia Pacific in Shanghai this spring. The luxury retailer will continue opening stores in mainland China but will be “making sure they’re in the right locations with the right adjacencies,” Fairweather said.

“Given the slowdown in luxury retail sales and more Chinese travelling overseas, the shops in China are now for window shopping.

A survey by the China Chain Store Franchise Association last spring showed that about half of the developers surveyed would be expanding in top districts in these cities and nearly a quarter would build in average districts.

Luxury brands prefer downtown locations in big cities like Shanghai and Beijing.

“I can confirm that the idea is not to develop in the second rate or fourth rate cities in China. We do want to keep our presence in China in t tiffany he iconic areas,” Chief Executive and Chairman Bernard Arnault told analysts last month.

Luxury brands’ increasingly careful assessment of the China market could hurt developers’ bottom line if it means cutting back on rentals.

The average rent in a high end shopping centre in a smaller city fell 2 percent last year while the average vacancy rate rose to 10.9 percent, the opposite of what happened in bigger cities, according to the Knight Frank and Woods Bagot report.

“For the newer centres in non core locations, the landlords don’t have pricing power,” said Steven McCord, local director for China retail research for property firm Jones Lang LaSalle.

tiffany Samsonite to bring in High Sie

Samsonite to bring in High Sierra

Luggage major Samsonite India is repositioning itself as a luxury lifestyle brand. Samsonite, w tiffany hich has acquired Amercian brands High Sierra and Hartmann, said tiffany the two brands would be introduced in India by mid next year.

While Hartmann product portfolio comprises luxury luggage, High Sierra range extends to categories such as T shirts, backpacks, fli tiffany p flops, adventure luggage among others. The company is looking at opening 50 points of sale for High Sierra next year.

Subrata Dutta, Managing Director, Samsonite South Asia, said, started with travel luggage and diversified into variants such as shoes, bags, totes and accessories. The two brands will help us position ourselves as a lifestyle brand and not just a luggage only brand. Its brands include Samsonite Black Label at the luxury end, Samsonite tiffany and affordable brand American Tourister.

Dutta said the footwear range was priced at Rs 3,000. Recently, Samsonite had discontinued its licensing arrangements with Timberland and Lactose for bags. want to focus on our brand portfolio He said the footwear range contributed about 7 per cent to its turnover.

The company said it was eyeing a turnover of Rs 800 crore by the end of this fiscal. Last year, it reported a turnover of Rs 640 crore.

For American Tourister, the firm is working on expanding its retail reach to smaller towns and cities. The company currently operates 296 company owned stores and franchisee owned stores over 600 cities.

Asked if there is a slowdown in the travel category, Dutta said there had been slump in the category. Also, prices had gone up by about 15 per cent due to dollar rupee fluctuation.