Fourteen new Gucci outlets are rising in China's tier 2 cities, including Dalian and Wuhan. This is according to a note from Kering SA, the French international luxury which also owns Yves Saint Laurent, Balenciaga, Alexander McQueen, Bottega Veneta, Boucheron, Brioni, and Pomellato.
The note, first reported by Bloomberg, said Kering SA believes in China's significance for Gucci's global reach. The luxury group considers Gucci as its biggest brand with it holding more than three-quarters of its operating profit just within the first half of the year.
Kering SA was impressed with China's millennial shoppers, highlighting in the note that the demographics are willing to spend on luxury items. For example, they don't have a problem spending $1,400 on accessories such as crystal-studded sunglasses and velvet clutches.
Sergi Villar, Kering's real estate director, described China as a "key growth engine for the global luxury market."
Kering's plan of expansion in the Chinese market may have also been inspired by a report from Bain & Co., saying that Chinese shoppers accounted for a third of the global luxury market worth $260 billion.
The buying power of the Chinese has just been proven once again last Singles Day even held in November. That day alone, the top online shopping sites accumulated a total of $60 billion online purchases.
The data is unsurprising for some who have been following the developments in the buying power of the Chinese millennials. A 2019 report from Credit Suisse on global wealth found that China has wealthier residents than the United States.
To be exact, China has 4.4. Million millionaires. That amount translates to having 100 million members of the world's top 10% of earners. By comparison, the U.S. only has 99 million members belonging in the same category.
In the most recent China Rich List, there were more than 156 millionaires who are below 40 years old. Another research found that China's ultra-high-net-worth individuals with more than $1 billion are younger than 50 years old. Most of them or 93.5% are completely self-made.
This may be the reason why Gucci has always set its eyes strategically on China. Kering opened its first Gucci store in Shanghai in 1997. Aside from the 14 more Gucci stores rising in China, Gucci has a total of about 50 physical locations in the country.
At the same time, Gucci is also strengthening its online presence in the country. In November, Kering partnered with Tencent. The partnership entails that Tencent's social media players, such as QQ and WeChat, will provide native content for the Italian fashion brand.
