It looks like the rapid expansion of luxury brands into China we keep hearing about isn't so rapid anymore. Ready and raring to take their place? Affordable fast fashion brands, according to new reports.
The Financial Times' Vanessa Friedman, who can be relied upon for sharp insight into all matters of the fashion biz, got an early look at an in-depth luxury markets report by Ledbury Research--which indicated that luxury executives aren't quite as optimistic about the Chinese demand for luxury goods as they once were.
Demand in China for luxury has been slowing and the report seems to provide evidence that it may not bounce back. Friedman quotes a Ledbury rep who says, “uncertainty of the Chinese situation is definitely key– it’s unknown whether it’s temporary, if it’s to do with graft, a cyclical phenomenon, or the beginning of a longer-term shift due to changing consumer tastes (even though there’s probably still a lot of untapped potential in China).”
On the other hand, demand for more affordable fashion is apparently growing faster than ever in China--a trend that is perhaps indicative of such "changing consumer tastes."
According to Kim Mercado from CBRE, a commercial real estate services firm, affordable brands like Zara and H&M are expanding more rapidly in Asia than luxury brands. "Luxury has been in Asia for a really long time, so they were some of the first brands to come into the market, so there's not as many markets for them to expand into," she told the Wall Street Journal. "The second reason is there are a lot more mid-range, mid-tier value brands out there, so there are a lot of them coming into the market."
She points to cultural changes in China such as urbanization and the emergence of a middle class as reasons why fast fashion has become more desirable.
She also touched on the growth of local Asian brands--which, with a little help from China's chic new first lady--could become even stronger.
Meanwhile, it sounds like European luxury brands won't be expanding the way they once were. Mercado speculates that, instead, they'll invest into their already-existing stores and focus on improving customer experience, leaving room for Asia's retail landscape to become more diverse than ever.