HONG KONG: Brands and retailers will need to work harder to engage Chinese tourists as the country's economic slowdown hits consumer spending, early Golden Week data suggests.
The Golden Week holiday in China sees millions of people travelling and spending, with retailers across Asia seeking to entice them with high-profile promotions. But figures from the Ministry of Commerce showed revenues of retailers and catering firms grew 11% during the holiday period, down from 12.1% the previous year.
Ongoing economic uncertainty and a weakening currency are diminishing motivations for Chinese to spend heavily in shopping destinations like Hong Kong, where 80% of tourists hail from the mainland.
The Hong Kong Retail Management Association told the South China Morning Post that most of its member companies had seen single-digit or low double-digit growth in sales value compared to the big spikes of yesteryear.
And with tourist numbers numbers only slightly up, spending per head had fallen.
On major holidays like Golden Week and Chinese New Year, shopping for luxury items is a large part of travel plans – an estimated 90% of Chinese consumers plan their luxury purchases three to four months in advance with targeted products firmly in mind.
"In recent years more than 50% of Chinese consumers have travelled during the October Golden Week. That's close to half a billion Chinese yearning to buy authentic luxury brands without the high price point, import and consumption taxes," Molly Leis, Asia Pacific marketing director for brand development agency SGK, told Luxury Daily.
For brands looking to profit despite China's spending slowdown, they must engage potential customers throughout the year, not just during Golden Week, to ensure their brand is front of mind for luxury purchase planning, Leis advised.
"The Chinese consumer is becoming more and more sophisticated, and if a brand reaches out exclusively with Golden Week or Chinese New Year campaigns, the consumer will question the brand's authenticity," she said.
Data sourced from Reuters, South China Morning Post, Luxury Daily; additional content by Warc staff