After recession, Asians take care in choosing their luxuries
HONG KONG : Seven years of economic woe may have taught Asia's zealous shoppers some restraint but, with economies picking up, they are again flocking to luxury goods stores, only this time with a more discerning eye.
As disposable incomes nudge the record highs of the mid-90s Asian boom years, consumers have spurned the spend, spend spend attitude for a more choosy approach towards the finer things in life.
"The market is more mature now, people are not just throwing money at the most expensive thing; they have learned and they are choosing wisely," says Simon Tam, wine consultant with the Cafe Deco Group chain of bars and restaurants in Hong Kong.
"They are investing in quality as opposed to the things they think they should be buying."
Asia is THE target market for luxury brands, accounting for more sales than any other region, including Europe and the United States.
For instance, half of Switzerland's eight billion dollars of annual watch exports come here.
"The barometer of how well a (newly launched) watch will do depends on two key markets, Asia and Italy," Singapore's Sincere Watch executive vice-president Ong Ban tells AFP.
"If it can do well in these two major markets, it will usually do well in other parts of the world."
Asia's numbers are huge. For France's LVMH, the world's largest luxury goods maker and parent of brands such as Louis Vuitton and Veuve Clicquot, 40 percent of world sales are generated here. For shoe label Gucci it's 45 percent.
Still heading demand is Japan, which for some brands accounts for a third of global sales.
Although economic problems have cast a shadow over the past 15 years, designer labels are still investing heavily. Among them is French retailer Chanel, which will open a 240-million-dollar flagship store in Tokyo on December 2.
"Chanel's revenue in Japan is three times more than in France," said Richard Colasse, CEO of Chanel Japan.
If mobile phones were icon of the last boom, this one is likely to be characterised by the smell of cigar smoke.
"In the last year dozens of humidors have opened throughout Hong Kong -- and all the hotels I speak to are busy putting together cigar and brandy deals in their bars," says Andrew Dembina, editor of the newly launched Cigar Cutter magazine, aimed at Asia's new generation of stogie chompers. "You didn't see that before.
"The market is also different in that consumers are no longer simply buying Cuban cigars because they are the most expensive. Like the early days of new world wines people are experimenting and sourcing cheaper cigars of equal quality from other parts of the world."
Huge changes have been seen in the luxury travel market, with travellers opting more for private flight charters in the wake of the September 11, 2001 US terror attacks. They are also demanding more value for money and healthy options.
"Guests are getting younger, they are asking for more for their money and they want more than just gyms," said a spokeswoman for Hong Kong's Peninsula Hotel, one of the most luxurious in Asia.
"Guests are indulging themselves still, but they are doing it with the family or as couples."
Some things, however, are so luxurious that their attraction remains unaffected by mere economics.
Rolls Royce sells some 15 percent of its bespoke limousines to Asian customers. Its Phantom model, released last year, is the most expensive car the 100-year old company has ever produced.
"We launched it during SARS but it still sold as expected -- about 1,000 a year -- because super-luxury goods avoid the cyclical nature of economics," Colin Kelly, the brand's regional director, tells AFP.
While Hong Kong no longer possesses more "Rollers" than anywhere else, Kelly says the honour has not gone far.
"China is probably up there now -- 25 percent of our Asian sales go to China now," says Kelly.
If the traditional Asian markets are maturing, the Chinese luxury market is still in its formative stage -- and revelling in conspicuous spending.
Analysts expect growth in the world's most populous country to boost Asia's share of world luxury sales to 60 percent.
"Chinese people have no qualms about rewarding themselves for their success," says Rolls Royce's Kelly. "It's natural for them to show off their success."
Shanghai's Nanjing Road is proof of the revolution. Along the metropolis's Fifth Avenue, the titans of Western luxury have replaced once shabby shops with chic boutiques.
Christian Dior, which has been in China since 1998, recently doubled its presence in the elite Plaza 66 mall and is planning to set up Dior Hommes in December alongside Prada, Cartier and Gucci. And Italian Ferrari opened its first office in this September.
"Chinese have expressed a great interest in Ferrari and the lifestyle that we represent," said Enrico Mussetto, a top marketing executive with the firm.
"Our customers are successful people who know how to take advantage of the economic growth that China has to offer," Musseto said.
- AFP
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