The global luxury industry faces its darkest hour in recent history. With the confirmation of the Coronavirus epidemic in China, tourists from the mainland have virtually stopped travelling or spending locally. The timing of the epidemic, which overlapped the Chinese new year festivities this year, has only made matters worse. According to a Bloomberg report – Chinese shoppers spent $143 billion during this week-long festive period last year.
The protests in Hong Kong since June 2019 already were dampening industry sales. However, the impact was tempered by burgeoning sales in China and South Korea. China accounts for a third of global luxury spends – both in the mainland and abroad. Wall Street Journal reported that Chinese consumers purchased close to $110 billion worth of luxury goods – primarily outside China in 2019.
With the outbreak of the deadly Coronavirus, the Chinese luxury market has stalled. No longer are Chinese tourists travelling or splurging on luxury goods. Luxury stores and brands across the globe feel the impact. For example, high-end stores in Milan and London, once bustling with Chinese tourists, are now relatively empty with not more than one or two tourists in sight. Capri Holdings (owner of Versace, Jimmy Choo brands), for example, already warned investors to expect a $100 million slash in revenues due to lower sales to chinese travellers, reports Wall Street Journal.
The economic situation is exacerbated by the closing of stores on the mainland. People across the region are exercising precautions and staying away from malls, shops, restaurants, and cinemas. According to The Guardian, Burberry closed 24 of its 64 stores in mainland China. Those Burberry shops that remained open reduced hours because shopper numbers plunged 80%. Stocks like LVMH and Kering have also taken a beating since the outbreak.
Luxury industry news aside, the human toll on families bears heavily on us all and we hope that this crisis gets resolved soon. Until then, please stay cautious and be safe. For more information on how to do so, please see the latest US Centers for Disease Control (CDC) guidelines on prevention here.