Shopping Centers Today

JUL 2014

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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nondomestic retailers to establish wholly foreign-owned enterprises, global brands got more aggressive in rolling out stores. Foreign retailers have concentrated largely on China's four-largest cities — Beijing, Guangzhou, Shanghai and Shenzhen — before fanning out into the secondary and tertiary cities. Not surpris- ingly, shopping centers have prolifer- ated. Collectively, mainland China's 28 largest cities have about 600 shopping centers, according to Jones Lang LaSalle, and an additional 150 are expected to open throughout the market over the next year. Domestic and other Asia- based real estate firms have developed much of the stock in the market. Like their counterparts in other fast-growing markets in Asia, Chi- nese consumers have a strong affinity for luxury brands, which they view as symbols of success and sophistication, says McCord. For many years China's newly rich fancied luxury products em- blazed with logos, but tastes are evolv- ing. Increasingly, well-heeled consum- ers prefer designer goods that allow them to express their individuality, says McCord. "Consumers in China and other parts of Asia love luxury goods because these are very status- oriented societies," he said. "You want to show people you have made it." However, "particularly in the larger cities, you see some second-generation wealthy people who have different de- sires than their parents did." Indeed, China's once-exuberant luxury-goods market is changing in a number of ways. Sales on the mainland have moderated as a result of a slower economy and the central government's crackdown on gift-giving in the public sector. Gifts are often offered in return for favors in China, and it has not been uncommon for government officials seeking to cozy up to their superiors to give them gifts (sometimes intended for spouses) like Gucci handbags, Hermès scarves and Montblanc pens. It has also been common for businesses seeking to curry favor with local officials to give them pricey gifts. The new restrictions have eliminated a big source of demand for luxury goods, says McCord. By some estimates, gifts to government of- ficials have accounted for up to half of sales in certain luxury-goods categories. Last year luxury-goods sales in main- land China grew by a mere 2 percent, and similar sluggishness is expected for this year, according to Bain. Some 60 percent of the interna- tional luxury brands that Woods Bagot and Knight Frank analyzed in a report missed their targets for store openings in China last year: Gucci, which had planned to open 10 stores, opened none; Cartier, which planned to open six, instead reduced its store count in the market by one. After gifting to government officials is removed from the equation, "you are left with the more mainstream customer group, which is more as- 48 S C T / J u l y 2 0 1 4 In the U.S. and other markets that draw flocks of tourists from China, some shopping center landlords are going out of their way to make it easier for these visitors to engage in their favorite pastime while traveling, which apparently is shopping. Taubman Centers– owned Beverly Center, in Los Angeles, has stepped up efforts to court tourists from China, which is now the largest overseas market for visitation to Los Angeles. Last year Los Angeles reported some 570,000 visitors from China, up 21 percent from the year before. Collectively, these visitors spent a record $1.6 billion in the Golden State in 2012, according to tourism organization Visit California. Because Chinese consumers tend to rely heavily on social me- dia when planning travel and shopping excursions, Beverly Center has set up its own account on Weibo, China's equivalent of Twit- ter, and it uses the site to send alerts about new products and special events. The shopping center's website provides information in Man- darin, among other languages. Visitors arriving at Beverly Center as part of a tour group are greeted by a Mandarin- speaking specialist and receive a card offering discounts at stores and restau- rants. Many of the stores have bilingual staff members, and nearly 100 Beverly Center retailers accept China UnionPay, a global bank-card network. Susan Vance, Beverly Center's market- ing and sponsorship director, says the mall has long been popular with foreign tourists, but the number of visitors from China has grown significantly over the past year. As part of its marketing efforts, the mall has forged relationships with "key audiences and influenc- ers of Chinese tourists," including Chinese students studying at local universities. Many of these students receive visits from family members during the back-to-school and graduation times, which also happen to be peak times for shopping. Beverly Center has capitalized on its prox- imity to Hollywood to woo locals and tourists alike. — AR Dazzling starstruck Chinese tourists in L.A. B e v e r l y C e N T e r 46-50_SCT_JUL14_China.indd 48 6/12/14 5:58 PM

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