CHINESE SPENDING REDEFINING THE AUSSIE RETAIL MARKET
13 January 2016,
A SHIFT in Chinese shopping habits is redefining Australia's retail landscape, according to CBRE.
The global property advisor has released its Luxury Retail 2015 report which indicates that increasing appetite levels for luxury goods is impacting the Australian retail market.
The report showed that 70 per cent of all Chinese-led luxury purchases are now transacted overseas, resulting in increased sales across the world, including in Australia.
CBRE head of research and consulting Andrew Phipps says the Asian downturn has pushed luxury attention worldwide.
"Chinese purchasers account for 30 per cent of the luxury spend worldwide and 70 per cent of these purchases take place overseas, showing that the downward shift in their economy has prompted Asian consumers to rethink their purchasing habits," says Phipps.
"The advent of the new 'anti-extravagance legislation' in China and their consumers' growing awareness of price differentials of up to 70 per cent has led to many preferring to make their purchases overseas, where the prices are far more attractive."
The report suggests the shift in Chinese shopping habits is providing opportunities for luxury brands to grow their presence across Australia, as it becomes a target destination for luxury expansion over the next five years.
CBRE Australia head of retail brokerage leasing Leif Olson says international brands are looking to capitalise on the uptick in demand for luxury goods by securing a presence in Australia's biggest fashion hubs.
"In 2015, the Australian retail landscape has transformed significantly, with a plethora of global brands lining up to open stores across the country," says Olson.
"This momentum shows no sign of slowing down, with affordable luxury brands to lead the charge in Australia over the next year, while top tier brands will look at securing flagship assets in core locations."
Olson says the next wave of growth in Australia's luxury retail market would be centered on the expansion of retailers in Brisbane, Perth and Adelaide; the addition of food and beverage to luxury retail; and growth of premium children's wear.
"The addition of food and beverage to luxury retail stores is an untapped market in Australia, and a widespread concept already seen in the world's largest fashion meccas, including Hong Kong and Macau," says Olson.
"Not everyone is in a position to splash out on a luxury branded handbag or wallet, but being able to have a coffee or meal at Armani, for example, broadens the brand's appeal and makes it more accessible for everyone.
"Adding a food and beverage component is a key step towards making a brand more diverse, transitioning it from being fashion-oriented to more lifestyle driven."
Olson adds that while luxury children's wear was still largely confined to established luxury markets in Asia at present, the sector offered enormous opportunity for growth in Australia.
"Shifting the appeal of a brand from adults to families will be a major focus of retailers expanding in Australia, with this helping them to engage and reinforce relationships with their key clients - the parents - while building their future consumer base from the next generation," says Olsen.