Givenchy, a unit of French luxury goods giant LVMH, plans to triple its number of stores in China over the next two years as other luxury brands scale back their expansion plans amid an anti-corruption campaign led by President Xi Jinping.
In an interview with the South China Morning Post, Sebastian Suhl, chief executive of Givenchy since March last year, said the fashion brand would speed up its bold expansion plan by increasing the number of outlets to 30 from about 10 in major cities such as Shanghai and Tianjin. The brand is luring young Chinese consumers with trendy yet competitively priced ready-to-wear products.
Suhl, a former chief operating officer for Italian brand Prada, said the mainland's relatively fast economic growth and rising middle class were driving his expansion plan, even though he is aware of a pledge by the president to clean up endemic corruption, which is often associated with giving luxury gifts such as handbags and jewellery.
"Concern about the crackdown on the luxury goods market on the mainland is likely to be temporary because China needs to promote domestic consumption by boosting the consumer discretionary sector, such as services and non-essential goods," Paris-based Suhl said.
Numerous reports have highlighted that the mainland's much publicised crackdown on extravagant consumption has played a significant role in the slowdown in the luxury market, especially after Xi launched a policy to discourage officials from displays of wealth and lavish spending. Some Chinese officials are known to expect bribes in the form of luxury goods and meals at upmarket restaurants.
The veteran brand manager said Givenchy's first boutique on the mainland, which opened in Shanghai in December, had shown "high single-digit" growth in revenue and earnings at a time when other rivals had stopped opening new outlets.
"Our more diversified product line, including leather goods, ready-to-wear for both men and women, helps us to weather the economic cycle," he added.
Earlier, the Italian brand Gucci, owned by PPR, said it would not open any new stores on the mainland this year after growth in the Chinese market fell sharply to single digits last year.
LVMH, the world's largest luxury group with more than 60 luxury brands, said it would not open new stores in second and third-tier cities after noticing a preference for luxury shoppers to head to the big cities.