Leading luxury brand and Birkin bag maker Hermes opens a new, enlarged store in China’s Nanjing City, which speaks volumes about the luxury industry’s confidence in a substantial market share of Chinese shoppers after three years of strict COVID-19 restrictions.
Hermes first opened a store in Nanjing around 2010 and has relocated to the upscale mall Deji Plaza, with a broader product selection spread across a two-story building from silk scarves to their much-coveted leather goods, as well as premium home décor, dazzling jewelry collection and luxury clothing.
Aside from Hermes, various European luxury houses continue to invest in China. It is expected to carry the largest market from the retail sector by 2025, despite a turbulent year marked by disruptions from the pandemic.
In late December last year, the country started to lift travel restrictions. It began to push up the share prices of global luxury companies, including the world's largest, LVMH, which houses Louis Vuitton, Givenchy, Fendi and more.
In fact, Hermes and LVMH both generated around 30% of annual sales in China in 2020, according to UBS.
Mainland China, where Hermes counts 27 stores, has been a strong focus for the leather goods specialist. Last year, Hermes opened a larger Wuhan store and set up its first shop in Zhengzhou, in Henan province. The country is expected to be an essential source of growth in the coming months as Europe faces an energy crisis and the U.S. economy cools.
Bernstein analyst Luca Solca forecasts, “luxury sales could grow between 25% and 35% in the country this year while in the West they are expected around 5% to 10%.”