The threat of the coronavirus on European luxury retailers during the upcoming Lunar New Year shopping fest is looming large. With Chinese tourists being a key driver of sales during this festive period, travel restrictions and fears surrounding the virus could lead to a significant drop in revenue for luxury stores.
As we approach the Chinese New Year on January 25th, concerns are mounting about the potential loss of sales that European retailers may face. The impact of fewer Chinese shoppers making their way to Europe for luxury purchases could be felt for weeks to come. The luxury giants, LVMH, Richemont, and Kering, have already experienced a decline in their stock prices as a result of the anticipated decrease in Chinese consumer spending.
Chinese tourists are known for their lavish spending habits, with their contributions making up a substantial portion of the luxury industry’s revenue. The fact that approximately 35% of global luxury income comes from China underscores the importance of this consumer segment.
In 2019, Chinese spending in Europe saw a notable increase, with shoppers splurging 6% more than the previous year. Their penchant for high-value purchases, such as watches and jewelry, also saw a rise in spending. The UK, in particular, experienced a surge in Chinese spending on luxury items, highlighting the significance of this consumer group for the country’s retail sector.
Last year’s Lunar New Year celebrations brought a boost to European sales, with tourists from Taiwan emerging as a key source market. Their increased spending during this period helped offset potential losses from other regions. However, with the coronavirus outbreak spreading and travel restrictions being put in place, the outlook for this year’s festivities remains uncertain.
As the luxury industry braces for the impact of the coronavirus on Chinese shopper behavior, retailers are hopeful for a rebound during China’s upcoming Golden Week celebrations. The ability of luxury brands to adapt to changing circumstances will be crucial in navigating these challenging times.
To stay updated on the latest developments regarding the impact of the coronavirus on the luxury industry, check out these informative links: Business of Fashion and Vogue Business.
