Big luxury brands are still betting on physical retail to boost sales in major cities like New York, Paris, and London, despite the challenges brought on by the pandemic, according to a recent report by Savills, a real estate specialist. These cities, known for their affluent domestic markets and resilience, have proven to be attractive to retailers. New York benefits from a strong domestic tourism market, while Paris sees lower e-commerce penetration, leading customers to its brick-and-mortar luxury stores. London, although struggling in its overall recovery, remains a magnet for tourists and locals alike.
In contrast, cities lower down the ranking, such as Hong Kong, face a longer road to recovery due to a decline in inbound tourism. However, Savills sees opportunities for luxury retailers in emerging markets, especially in the Middle East and Asia. Dubai, Cairo, Saudi Arabia, and Bahrain have affluent domestic populations and present interesting prospects for luxury brands in these regions. China, with its stringent Covid-19 containment policies, has fostered domestic tourism and given rise to new retail hotspots. Savills predicts that luxury brands will follow top developers into cities like Chengdu, Hangzhou, Kunming, and Ningbo, with Hainan showing the most potential as it is set to become a duty-free zone by 2025.
The pandemic has significantly reshaped the luxury shopping landscape, with cities focusing more on domestic shoppers. Moreover, the role of physical stores has evolved, with brands now recognizing the importance of reconnecting with customers and catering to their longing for human interaction after prolonged periods of lockdown.
Useful links:
1. Savills
2. The New York Times
