NEW YORK, United States — Tiffany & Co. expects double-digit growth in China next year despite a weaker economy, as consumers curb their overseas luxury purchases and spend more at home.
The US retailer, which last month agreed to be acquired by LVMH for $16 billion, sees momentum continuing in 2020 following “very high” double-digit growth in mainland China over the past two years, according to Tiffany Chief Executive Alessandro Bogliolo. Sales are benefiting from Tiffany’s increased commitment to the world’s largest consumer market, as well as China’s moves to boost domestic spending, he said.
“All the efforts the Chinese government has done to increase local consumption, like the decrease of the sales tax, of course is an incentive for Chinese customers to purchase locally instead of flying to Japan, the US and Europe to do their purchases,” Bogliolo said in an interview with Bloomberg Television.
Sectors ranging from tourism to luxury goods that relied heavily on Chinese spending abroad are having to rethink their strategies as the yuan depreciates and mainland visitors avoid protest-stricken cities like Hong Kong and Paris. Luxury companies in particularly are aggressively expanding within the mainland to court Chinese spenders who account for a third of global demand.
Kering SA is planning 14 new outlets across six Chinese cities for its brands like Gucci and Bottega Veneta, while other brands under Tiffany’s new owner, LVMH, also plan to enter new Chinese cities.
Tiffany is planning to add “very few” stores in China during the new year, Bogliolo said. Instead, the company’s strategy is to expand existing locations. The chief executive was in China for the opening of Tiffany’s redesigned flagship store in Shanghai, which nearly doubled in size to 10,000 square feet, making it the biggest Tiffany’s location in Asia.
The US luxury retailer is also counting on the launch of its website in China to help it reach customers in less-developed cities where it currently doesn’t have stores.
Bogliolo said Tiffany has seen a double-digit decline in sales in Hong Kong because of the pro-democracy protests. But the company isn’t changing its strategy there. The city has gone through other difficult moments and bounced back, he said, “so I’m really confident about Hong Kong, on its future role in the luxury world.”
By Tom Mackenzie and Jeff Sutherland; editor: Rachel Chang.