Refocus on destination markets steps up a gear in 2017

The slowing growth in personal luxury goods spend in 2016 was apparent in the volume of new store openings in 2017, with the appetite to agree to new leases, and therefore open new stores, somewhat muted. Global new store openings* by luxury brands will be in the region of 350 by the end of the year, down on the c470 reported for 2016.

While luxury brands have opened fewer stores this year, what stores they have opened have been predominately focused on destination cities in Europe, North America and Asia Pacific markets beyond China. All these regions have seen a proportional increase in share of new openings in 2017. In contrast, China and Middle East reported proportional declines.

Luxury store openings in 2017

The refocus on destination and ‘heritage’ markets seen last year intensified in 2017 and is apparent in the cities that topped the rankings for new store openings. Paris bounced back topping the city rankings this year having ranked second in 2016, this was on the back of improved operating conditions as tourism to the city rebounded following the security events of late 2015.

^{Notes: *excludes relocations, re-openings of refurbished stores, pop-ups and concessions in department stores. Also excludes store openings by luxury beauty brands.}

Top 10 cities for luxury store openings in 2017

While China saw fewer new store openings in 2017, the volume and habits of its residents when it comes to luxury goods spend had an important bearing on luxury store openings in the wider region. Singapore and Tokyo are expected to see year end store openings in line with that reported in 2016, driven in part by strong historical growth in Chinese tourism.

However, in the case of Tokyo its domestic spend market also remains a major attraction particularly as Chinese tourism growth has started to slow. Similar drivers have raised the appeal of Toronto, Los Angeles and Kuala Lumpur to expanding luxury brands, helping to place both cities in the top 10 for new luxury store openings in 2017.

The average store size of new openings globally increased to c.3,300 sq ft this year up from c.3,100 sq ft in 2016. Even the most ‘expensive’ real estate cities such as New York and Tokyo saw average store sizes increase in 2017.