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The 2013 Brand Reach Review Part 1

2012 saw the luxury sector in China slow dramatically for many of the most visible brands operating here. The double-digit growth figures dropped to single digit, and the generally weak global performances were blamed on Asia, and in particular China. This blame, in our opinion was very misguided, a matter we reported on many times towards the end of the year. Simply put, more Chinese money was being spent on luxury products and services than previously, but not with many of the brands that had benefited for the previous few years. In fact, thanks to the travelling Chinese, much of it contributed to the performance of luxury brands in elsewhere in the world. 

The year of the dragon, was in our opinion a watershed for the Chinese luxury market; a time when consumers in tier one and top tier two cities became more selective, more knowledgeable and voted with their wallets. Some brands predicted the change early enough, whilst others found it necessary to wait for poor results before reacting. These consumers also went overseas to buy, and to seek new and more interesting rewards and gifts. Of course the less savvy consumers in tier two and three cities still required badges of status, but waiting for the new party leadership made them a little more cautious.

2013 will be different, both because this is China and nothing stands still for long, and because the changing consumer dynamic will mean that brands must become more engaging across a growing and less homogeneous market. Assuming that double-digit growth here in China was a constant to observers and commentators like us, was always improbable. The cusp that we are at is a time to evaluate where the market is now, and to consider where it will move to, which is the basis of the Luxury Insights China 2013 Brand Reach Review.

In this multi-series report, we take a look at where luxury brands are in terms of their geographical spread across the country, the depth they have established in cities and regions, and link this to the wealth demographics of the luxury consumer. In the first of the series, we take an aerial view across the four most active luxury sectors, using 152 brands currently with 3,222 operating stores or dealerships in Mainland China as our benchmark in order to give perspective to what will soon be the worlds largest luxury market, and already accounting for the worlds largest single luxury consumer group.

The following parts of the series will look at specific sector dynamics and areas of potential expansion, and will be published over the next few months in Luxury Insights China. Throughout 2013, we will continue to monitor the brands on our list, across the watch, jewellery, fashion and luxury car sectors. In early 2014, we will again review Brand Reach year on year and report back on trends and provide opinion as to what the coming year will hold.


On the map above, 22 cities are listed each falling within the top 15 in terms of store or dealership coverage for one or more of the four sectors reviewed. Individual sectors are colour coded, the number in the coloured circle represents the national ranking of that city in terms of its store numbers.

What is apparent from this map, is that cities that do not fall into the top 20 GDP category, still have many wealthy citizens and therefore attract luxury brands, the probability is that in these locations the gap between the wealthy and the rest of the population is large. A city like Harbin in the Northeast ranks well in the watch sector, but does not make the top 15 in luxury cars, whereas Tianjin close to Beijing ranks in all four categories, but lowest in watches.

Top 20 GDP city Qingdao ranks 11 in luxury cars, yet doesn’t make the top 15 in any other sector. In the December Luxury Insights China report Qingdao was featured, it is the home for electronics suppliers, and high-speed train manufacturing, and a major seaport, yet its importance to the luxury sector at this time is less than other cities.

The chart to the left is a cross sectional summary by sector and region. Fashion, jewellery and watches follow the same regional coverage pattern, but luxury cars follows and alternative, the Northeast having the lowest density of brands. Yet the same region is by far the strongest for watches, and the North has a relatively low density of fashion brands compared to the other sectors.


On the map above, each region is ranked according to the intensity of points of retail presence across each of the four sectors. The number in the coloured circle is the relative ranking position.

The South region is by comparison to the others a smaller geographical area and being close to the influence of retail in Hong Kong and Macau (which are not included in the region), it is likely to be less influential than most other regions, hence the brand presence being lower.


The intensity of luxury presence across the top 15 cities is shown on the map below, beyond the tier one cities of Beijing and Shanghai, the key cities by region are Shenyang, Chengdu, Hangzhou and Guangzhou.


The graph below shows brand retail intensity compared to the mean index value across all four sectors. Outside of the tier one cities intensity drops to approximately 5% on average, declining over the sample to just above 2%. Read part two of this special report for a further assessment of brand intensity demographics.

The next in this series of the 2013 Brand Reach Review will be published in the January/February Luxury Insights China report issued on March 1st. It will look in detail at the depth of brand engagement by region and consumer preferences in each, providing a view on the development of luxury in each in recent years.

Part Two will also review
the planned store openings for this year, and how these may change the dynamics and depth of luxury retail in China.

The brands included in this review


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