LOS ANGELES — The emergence of Chinese luxury consumers is having ripple effects across the West Coast retail landscape, where Chinese New Year has gone from being treated as a curiosity to a serious shopping holiday.
This story first appeared in the February 3, 2011 issue of WWD. Subscribe Today.
As 15 days of Chinese New Year celebrations kick off today to welcome the Year of the Rabbit, retail venues have readied for the festivities with their largest decorative statements to date, fashioned specialized merchandise and offers, and prepared staff to handle Chinese shoppers. Although it’s unclear if these efforts will translate into substantial sales gains, the potential to garner the loyalty of flush Chinese consumers who are traveling to the U.S. in higher numbers is a tremendous motivator.
The U.S. Department of Commerce forecasts that China will be the country that sends the most foreign travelers to the U.S. outside of Mexico and Canada by 2015, up from its position of 14th in the world in 2009. In 2009, spending by Chinese travelers in the U.S. ranked ninth with a total of $3.5 billion, and 92 percent of Chinese travelers report shopping during their stay in the country.
“Hawaii is seeing a huge influx of Chinese visitors,” said Jasmine Tso, marketing and promotions director for the Ala Moana Center in Honolulu. She pointed to data from the Hawaii Tourism Authority showing Chinese visitation to the state jumped 65 percent last year and projecting it would climb another 20 percent this year, and revealing that Chinese visitors to Hawaii spend $368 per person per day, compared with $275 for Japanese and $178 for Hawaiians.
Anecdotally, retail officials in Nevada, Hawaii and California find that Chinese shoppers are attracted mostly to recognizable luxury brands such as Louis Vuitton and Chanel, and spend a disproportionate amount on jewelry, watches and handbags. The comparative affordability of goods in the U.S., which could persist if inflationary pressures in China increase, is a significant driver of consumption. “A lot of it has to do with the cost,” said Tso of the Chinese shopping at Ala Moana. “It is still very expensive [in China.]”
As a result of Chinese consumers’ mounting spending power, Ala Moana has instituted various initiatives to entice them during Chinese New Year. Along with performances by martial artists and dancers to commemorate the holiday, Ala Moana has partnered with China UnionPay, which Tso described as the largest bank card issuer in China, to create so-called Premier Passports giving Chinese customers exclusive store offers and gift totes.
Similar to the Ala Moana Center, the Forum Shops at Caesars Palace in Las Vegas has become a more frequent destination for Chinese travelers — and its recognition of Chinese New Year has expanded accordingly. Marketing director Maureen Crampton said China has quickly taken its place among the top three countries of origin with the United Kingdom and Canada for international visitors to the shopping center. On average, she said, the Chinese per visit spend three to five times the amount of the average domestic shopper.
With their patronage up for grabs, shopping centers are aggressively pursuing Chinese shoppers. For example, Debra Gunn Downing, executive director of marketing at South Coast Plaza in Costa Mesa, Calif., said employees in the shopping center’s tourism department have made four trips to China over the last two years. Like other shopping centers, South Coast Plaza is advertising in Chinese language media to raise awareness in the Chinese community. Within the shopping center, she estimated 70 percent of stores have hired Chinese speakers.
The importance of Chinese New Year is notable across Las Vegas and Southern California, with massive visual displays and specialized merchandise geared to the holiday. Tiffany & Co. at the Forum Shops has 18-karat gold charms that make up the horoscope’s 12-year cycle and charms based on red envelopes intended for friends and relatives to give to one another at gatherings for the holiday. The Paul Smith store in the Crystals at CityCenter has rabbit-themed T-shirts, handkerchiefs and plate sets.
South Coast Plaza commissioned Fiesta Floats, a company known for crafting Rose Parade floats, to design a nine-foot-tall rabbit covered with fur of white coconut flakes and petals from bracteantha and other flowers. The Crystals at CityCenter’s golden rabbit made from fiberglass and foam is taller than South Coast Plaza’s by two feet and is seated on a carpet of flowers. Store windows showcase rabbits, and red and gold hues, for the Chinese New Year.
Chinese New Year “is definitely something that continues to grow,” said Hedy Woodrow, vice president of retail at the Wynn Resorts in Las Vegas. “Throughout our property, but also throughout the U.S., there is obviously a heightened awareness because of the Chinese economy.”
The retail staff at Wynn has been instructed on how to treat Chinese shoppers arriving for Chinese New Year, which this year coincides with the Super Bowl, also a major traffic generator in Las Vegas. Woodrow explained they greet Chinese shoppers in Mandarin with “ni hao ma,” or “how do you do,” make sure they allow them ample personal space and approach leaders in groups with the proper respect. “There is a large outreach, if you will, to make sure that they are accommodated and they feel comfortable,” she said.
The impact of these measures — and all the hoopla surrounding Chinese New Year — on sales could be relatively modest. Asked about sales related to the holiday, Woodrow said, “I don’t know if I would say they are growing by leaps and bounds. Certainly this year we will see improvement over last year.”