Many international luxury brands pursue retail expansion in China

According to research by realtor Knight Frank, the typical annual store growth rate for those already well-established in China is approximately 15-20 percent. Luxury retailers can often identify 4-5 suitable sites in Tier 1 cities, but many only find 1-2 suitable sites in Tier 2 cities. Interestingly, the prime locations in Tier 2 cities are usually occupied by local developers, so many international retailers find themselves partnering with the local players.

Generally, luxury brands that have a smaller presence in China are building more stores: Tod’s, Hogan, BrioniBelstaff and Jimmy Choo. Ralph Lauren is ramping up its China presence, adding an estimated 50-60 additional stores from 10 stores at the end of the third quarter 2012. Burberry is the exception. It continues to expand aggressively, adding a projected 43 stores to its 57 existing stores.

Projected luxury retail expansion in China by international brands

For some luxury brands such as Chanel, Bottega Veneta, Fendi, Hermes, Dior and even Louis Vuitton, we are seeing a trend toward modest expansion in order to maintain exclusivity. Of course, there will be more new entrants who finally feel comfortable to enter the Chinese market.

Vuitton, Burberry and Dior stores in Chengdu, China