Customers queueing up for a luxury brand at a shopping mall in Shanghai on Sunday. Photo: Chen Xia/GT

Customers in first-tier cities in China are seen forming long queues outside luxury boutique stores over the weekend, over reported concerns over possible price hikes and international travel restrictions that prevent them from taking overseas shopping trips.

At the International Finance Center in Pudong, Shanghai, long lines formed on Saturday at almost every luxury store including Louis Vuitton, Chanel and Christian Dior. Customers had to wait for more than an hour to enter, the Global Times observed.

Similar scenes were seen in other high-end malls, such as Beijing's SKP mall and the Mixc mall in Shenzhen, South China.

Customers said they wanted to get their favorite luxury products before prices jumped, and few came out empty-handed. A customer wearing a Chanel skirt and carrying an LV handbag told the Global Times on Saturday that "I heard the price of LV bags will be raised by 20 percent soon, and  as I can't go abroad now, I decided to get my favorite ones at home."

A sales guide said he had heard rumors of price hikes but had no official information.

"There have been big crowds since the Spring Festival," a staff member at the Chanel store told the Global Times. According to another store employee, queues are especially long over the weekend and on weekday nights.

Due to sharp declines in global sales revenue, luxury brands have been increasing prices to hedge against losses. LV raised its prices twice in the first half of this year. In May it raised prices on some of its popular products by more than 10 percent, and Dior increased its prices by around 13 percent in January.

Some customers also rushed to the stores because they could not go on their usual overseas shopping trips during the COVID-19 pandemic, Yang Qingshan, a professor at the University of International Business and Economics in Beijing, told the Global Times.

"Every year, the holiday season is an important growth season for luxury brands in Europe, where groups of Chinese tourists spend a lot of money in local luxury stores," Yang said. "Buying luxury products from local stores can be cheaper, especially in countries such as Italy and France, Chinese tourists have become an important part of their annual sales."

A customer outside the Shanghai LV store told the Global Times that instead of going abroad, another choice might be going to South China's Hainan Province, where a recently established free trade zone might offer some deep discounts for luxury brands.

As global revenue declines as a result of the closure of many stores and manufacturing sites, international luxury brands are increasingly turning to China's pent-up spending power. 

According to statistics compiled by Bain & Co, a consulting firm, the luxury goods market may have contracted by around 25 percent in the first quarter of 2020.

Several prominent international luxury brands have cited China in their half-year reports as one of the few markets with positive growth despite the global industry headwinds. 

Alessandro Bogliolo, chief executive officer of the US jewelry retailer Tiffany, said that the company is excited to see encouraging trends in rising sales in the Chinese mainland and e-commerce, which began to rebound in April and May, during which retail sales increased nearly 90 percent from last year.

In late July, LVMH Group reported a strong recovery in the second quarter in China's mainland market, saying it has witnessed "exceptional resilience" in Chiese consumers after the country contained the epidemic. 

Kering, another luxury brand group and the parent group of Gucci, Alexander McQueen and Yves Saint Laurent, said China is the only market in the Asia-Pacific region where sales have risen, with a 6.4 percent gain in the first half of 2020. Notably, some brands including Gucci have been seeing robust growth since mid-April.


Newspaper headline: Luxury boutiques draw long lines