With a weak yuan, but still having purchasing power, the Chinese prefer to spend at home. For this reason, Tiffany & Co. has decided to open new stores in China
Tiffany & Co., the well-known US brand and icon of luxury, has decided that it will open other stores in mainland China. The reason for the choice is to be found in the fact that the weak yuan invites the Chinese to spend at home without seeking these luxury goods abroad.
Tiffany’s CEO, Alessandro Bogliogo, in an interview in Shanghai on Thursday, said that currency fluctuations had “an influence on the Chinese intention to buy abroad”. “On the contrary, we have seen a large increase in sales in mainland China,” he added.
Tiffany has big plans for new Chinese stores, just think that, as confirmed by Bogliolo, Tiffany plans to make its flagship store in Shanghai its most important sales point in the world after its iconic New York City location
One of the first stores to open in a few weeks is a new Tiffany jewelry store at Beijing airport
Sectors ranging from tourism to luxury goods that relied heavily on Chinese spending abroad are collapsing as the yuan depreciates and the ongoing US-China trade war weighs on consumer confidence.
Tiffany claims that the protests “charge tribute” to its Hong Kong business while signalling a decline in net sales in the second quarter.
This lack of confidence in Chinese consumers’ buying on foreign markets has led many companies operating in China to change strategy. Many companies, therefore, prefer to open physical stores directly in China, where the currency is weaker.
Tiffany also has a shop in Hong Kong, where business has been interrupted by constant street protests.
Tiffany’s US sales to international travellers fell by more than 25% in the first quarter, even before the Chinese tourism ministry issued a travel advisory dissuading citizens from visiting the United States in June.
Bogliogo added that to maintain competitive prices, Tiffany will also absorb the prices on its US-made jewellery exported to China, rather than transferring the increases to customers.
“There is certainly pressure on the margin, but consider that it is only a percentage of our sales,” he added, adding that the company will find internal measures to mitigate the increase in costs.
Furthermore, it should be remembered that Chinese consumers have a renewed interest in luxury products, just think of the new e-commerce platforms dedicated to luxury like Tmall Luxury Pavilion or Secoo.
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