Chinese tourists spend less in Parisian department stores
For years, Chinese tourists have been welcomed by the Parisian department stores. And for good reasons: they only spend an average of 1.5 days in France but spend several hours shopping at the Galeries Lafayette or at the “Printemps”.
In four years the spending of these large buyers were multiplied by 6.5. But since last September there is a drop in the sales: the Chinese are spending less. Highly confidential sales figures of luxury brands watches and jewelry attest to a net drop in September. 18 of the 24 that are present in the Galeries Lafayette saw their sales decline.
Only Van Cleef, Piaget, Jaeger and de Beers sales increased
Cartier is the biggest seller of the sector in both department stores, but the French brand has seen its sales fall by 7% in September compared to September 2012, and 9% since the beginning of the year. Only Van Cleef, Piaget, Jaeger and de Beers sales increased compared to last year.
Omega remains in the top three best-selling claws but saw its sales performance collapse of 36 % in September and nearly 20 % since the beginning of the year. Dior, Chopard, Boucheron and Chanel sales fell in the same proportions .
But what has happened?
Several factors explain this change. There was the first law of the Chinese government in October 2012, which prohibits ministers receiving luxurious products as gifts: an anti- corruption directive that has been interpreted as a signal of alarm by the entire ruling class.
According to Bain & Co office, expenditures gifts have already dropped 5 % in 2013. “Man fashion and watches are the first affected” says Bruno Lannes, a partner at Bain.
Beyond this new regulation, the Chinese upper class creates the codes of luxury, and rejects now more ostentatious luxury, preferring the discretion of some brands.
Then, Chinese tourists were somewhat cooled by repeated attacks they have been suffering for one or two years. “For about six months, there is a growing number of attacks” noted in March Tang Lu, departmental director at the China Tourism Agency.
France is now seen as a dangerous country
Chinese customers usually travel with large sums of cash. They spend an average of 1,470 euro per store according to figures from Global Blue, specialized in tax free agency. In most cases these payments are made in cash!
In China, the media strongly advise not to travel to France: “Television has repeated several times not to go to France, because it is dangerous. We are careful, because if the television is talking about it, it means it is serious, “said the Chinese saleswoman of a duty free shop in boulevard Haussmann in Paris.
But it is especially the new law which started in September that changed everything.” The government wants to further regulate the organization of tourist trips,” says a manager of a major watch brand. The idea is to first pay the guides. Now they are employees of travel agencies.
Less “shopping breaks”
Previously, every tourist guide accompanying groups of travelers in department stores got a percentage (5-10 %) on each luxury good sale. By paying them, the Chinese government wants to better support their role and avoid all excesses.
Brands will probably keep on remunerating guides, but they should probably expect a decline in their commission. For now, the price of travels has increased by about 20%. Similarly, shopping breaks that were set by the guides should be defined before the trip and obtain the agreement of travelers.
For department stores and luxury brands this new text was a bombshell. For years, luxury brands surfed on Chinese tourism in Paris. “There will always be Chinese tourists in Paris, their number should increase, but they should probably spend less,” said one expert of tax refund.
For more information, you can also see this article about how to attract Chinese tourists.