SHANGHAI — Chinese consumers are looking for more meaning from their interactions with luxury brands and becoming more discerning customers, according to a new research report.
The report “Luxury Insights China” from market intelligence specialists FDKG highlighted the flagging fortunes of Gucci’s Shanghai restaurant, “1921 Gucci”, which opened with great fanfare over the summer but has since attracted middling reviews from consumers on social media.
“Opening a high-end restaurant in Shanghai clearly requires more to be offered, consumers have so many choices, and many better than a regular international restaurant named after a luxury brand,” the report said.
A Gucci spokeswoman issued the following response, downplaying the importance of the café to the brand’s overall strategy. “Gucci’s business strategy does not include brand extension through [further] expansion into food and beverage,” she said.
Also under the spotlight are retail developers from Hong Kong and Singapore, who are causing a stir on the mainland by re-creating their successful home formulas on Chinese soil, at a time when competition for luxury brands and high-end consumers is fiercer than ever.
“In many cases, luxury brands have [previously] directly followed the opening of new high-end malls, but in the current market, their choices have become greater than in the past, and the developer now has to work harder to attract and secure them,” according to the report.
Developers from these two locales were sighted as having an easier time than Western counterparts navigating cultural and communication issues in China, while at the same time offering luxury brands and consumers an international name and operational method.
Hong Kong’s International Finance Square, the developer behind Harbour City, is duplicating the concept in Chinese cities such as Chengdu, Wuxi, Chongqing and Suzhou.
In January 2014, the company opened its first copy of Harbour City, Chengdu International Finance Square (CD IFS). Its turnover reached 2.1 billion yuan, or $343 million at current exchange, during the first year.
“This is only the first IFS. For now, it’s performing beyond our expectations” CDIFS manager Siu Yau Shung was quoted as saying in the report.