China virus is threat to European luxury ahead of New Year shopping fest, says Planet
The spread of the deadly coronavirus in China could mean the world’s luxury industry seeing sales dented by fewer Chinese shoppers travelling abroad, tax-free payments specialist Planet said on Thursday.
China itself (and other countries) are looking at travel restrictions at a time when luxury retailers would typically be expecting a windfall in sales to Chinese shoppers due to the Lunar New Year celebrations.
Planet’s UK country manager David Perrotta said: “Chinese New Year, taking place on the 25th of January, is a time marked by travel and spend abroad. This is typically a major opportunity for retailers in Europe. Travel restrictions could have a significant impact on sales during this crucial two-week spending period.
“Of course, we need to wait and see whether the Chinese government will take steps to control the virus, so in the meantime we will all be holding tight. Not all is lost, as a big part of sales from Chinese shoppers comes towards the second half of the year during another national celebration, Golden Week, which could aid a recovery of the sector.”
Major names including LVMH, Richemont and Kering have seen share price falls in recent days given that Chinese consumers are among the biggest national groups buying some of their brands, with China and Chinese travellers already accounting for around 35% of the global income of the luxury sector.
Planet said that Chinese shoppers are “consistently” among the biggest spenders in Europe and their spending rose 6% year-on-year in 2019. They also spent more per head – with the average spend per purchase experiencing 10% growth.
In the UK, Chinese spending on luxury in general rose 15% last year while in watches and jewellery it was up 11%. The average spend for watches and jewellery also rose by 19% to €2,854.
And last year’s New Year spending from January 29 to February 11 rose 4% across Europe compared with 2017’s results. Sales to tourists from Taiwan saw growth of 27% during the celebrations making these nationals the fastest growing source market.
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