High-end department store SKP, a luxury unit of Beijing Hualian Group, marked its official entry into Wuhan, the capital of Central China's Hubei province, with a grand opening on July 26. The launch proved to be a resounding success, generating 100 million yuan ($13.8 million) in sales on its first day and attracting over 100,000 visitors since its trial run began on July 13.
SKP-S, the youth culture-focused luxury retail brand of SKP, simultaneously opened in Wuhan, aiming to captivate local Generation Z consumers with a curated selection of designer brands. This move is part of SKP's broader strategy to target younger, fashion-conscious shoppers in China's burgeoning luxury market.
SKP has rapidly gained a reputation for its high revenue from luxury product sales, surpassing London's Harrods. The flagship SKP store in Beijing posted impressive revenues of over 24 billion yuan in 2022 and 26.5 billion yuan in 2023. The Wuhan store is SKP's fourth outlet, following successful ventures in Beijing, Xi'an (Shaanxi province), and Chengdu (Sichuan province).
Despite the growing popularity of livestreamed shopping and e-commerce, high-end department stores like SKP continue to thrive. SKP Xi'an, which opened in 2018, achieved revenues of 9.5 billion yuan in 2022, though this figure declined to 8 billion yuan in 2023. Meanwhile, Chengdu SKP reported a revenue of 5.5 billion yuan last year.
The expansion of luxury shopping centers in China has been steady, driven by robust demand in the luxury market. Recent openings include the second outlet of megastore Shenzhen Coastal City and Shenzhen-based high-end shopping center Mixc's first store in Guiyang, Guizhou province. These developments underscore the vitality of China's retail industry.
According to the Hurun Chinese Luxury Consumer Survey by the Hurun Research Institute, released in March, the total size of the Chinese luxury market is projected to grow by 3 percent to $240 billion this year. This growth contrasts with the global luxury goods industry's slower pace in 2024. LVMH Group reported a 2 percent year-on-year decline in first-quarter revenue to 20.7 billion euros ($22.3 billion), while Kering Group saw an 11 percent drop and expects a 40 to 45 percent decline in profits for the first half of 2024. Hermes Group experienced growth, but the rate slowed from 22.3 percent last year to 12.6 percent.
The commercial real estate sector also reflected these trends, with Swire Properties' projects on the Chinese mainland witnessing declines in retail sales during the first quarter of 2024. Beijing Sanlitun Taikoo Li and Beijing Indigo saw drops of 5.4 percent and 2.4 percent, respectively, while Shanghai HKRI Taikoo Hui's sales revenue fell by 19.4 percent.
Conversely, the global luxury market has benefited from a resurgence in luxury vacations by Chinese travelers. The Bain & Co Luxury Goods Worldwide Market Study, released in June, highlighted the resilience of Europe and Japan, buoyed by tourism inflows. Japan, in particular, has thrived, attracting a diverse range of tourists beyond the historical predominance of Chinese travelers. The favorable yen arbitrage, which reached its lowest level against the US dollar in two decades, further boosted tourist inflows.
Global Blue reported that in-store sales in continental Europe grew by 19 percent in May compared to the same period in 2023, driven by positive dynamics across nationalities, with Chinese mainland shoppers leading the way with a 39 percent growth rate. This trend underscores the continued global momentum of luxury shopping, particularly from Chinese consumers.