According to yearly financial statements released by World Luxury Association (WLA), sales of luxury brands which increased around 30 percent in China in 2012 plummeted more than 50 percent in 2013, with businesses in watches and menswear taking the hardest hit.
Business insiders believe slashed business trips and official gifts against the backdrop of the massive anti-corruption campaign is the main reason for the drop in China. Sales of luxury watches and menswear decreased 95.9 percent and 60 percent respectively in the country in 2013.
Poor sales performances have also led to stalled turnover of stock. A WLA survey covering luxury stores in Beijing, Shanghai, Chongqing and Shenzhen reports that except a few popular models, most products in such stores are fairly piled-up in stock. Special offers and other sales promotions for the Spring Festival largely fell flat, with some luxury shops being frequented by zero clients during the festival.
Even companies which used to carry the day in the Chinese market have been caught out by the sales plump. Switzerland’s largest luxury conglomerate Richemont Group experienced an overall sales slowdown worldwide last year, and its business in China contributed negative growth for the first time in many years.
Armani and Dolce & Gabbana flagship stores in Shanghai closed doors one after the other in 2013. Analysts point out that if the sharp decreases in sales persist, more luxury stores will be forced to close down in 2014. The WLA predicts that a majority of luxury brands will see shops shut down in second and third-tier cities in China this year, while a number of companies have confirmed that they will not open new stores in China in 2014.