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An Analysis of the Development Situation of Garment Brand Enterprises in 2010 (II)
In recent years, the focus of both domestic and international brands has expanded beyond just the major cities. While many have traditionally concentrated on first-tier cities like Beijing, Shanghai, and Guangzhou, there is now a growing interest in second- and third-tier cities across China. These emerging markets are showing strong potential for growth, especially when it comes to luxury retail.
Luo Yingyi, executive director of Singapore Belle Retail Group, highlighted that their new division, Yingwu Department Store, will open its first location in Wuxi’s Zhongshan Road shopping district. This store will bring a range of high-end brands to the area. Following this, the group plans to open 20 more stores in cities such as Shenyang, Wuhan, and Kunming over the next few years.
Li Yufang, an investor and executive director at Dalian Times Square, pointed out that commercial properties in first-tier cities are highly competitive, with high entry costs. In contrast, second- and third-tier cities are developing rapidly, offering untapped consumer potential. “This is a great opportunity for us,†she said. “It's also why we’ve been able to attract nearly 30 international luxury brands to Dalian.â€
Notably, brands like PRADA, VERSACE, and FENDI are making their debut in Dalian, while others such as GIORGIO ARMANI, DIOR HOMME, LANVIN, D&G, and ANNASUI are entering the three northeastern provinces for the first time.
The global financial crisis has accelerated the expansion of international brands into these cities. According to industry observers, Chinese domestic demand is now a key driver of the luxury market. The traditional top three markets—Beijing, Shanghai, and Guangdong—are no longer the only focus. After the economic downturn, first-tier cities struggled, while second- and third-tier cities remained resilient.
DIOR HOMME, for example, had only one store in Beijing and Shanghai before opening in Dalian. “Even after the financial turmoil, we entered Dalian with a fresh perspective,†said Li Dakan, President of CHRISTIAN DIOR China.
Looking ahead, the consumption power of second- and third-tier cities is expected to grow significantly over the next few years. Compared to first-tier cities, which are more sensitive to global economic fluctuations, these cities show greater stability. Their economies are driven by local businesses, and consumer spending is more consistent.
Li Dakan noted that multinational companies have been cutting back in first-tier cities, leading to more cautious consumer behavior. However, in second- and third-tier cities, people are more willing to spend on luxury goods. A key factor is the rising per capita income in these regions, which is often faster than in first-tier cities. As a result, residents have more disposable income and are more eager to embrace urban lifestyles and luxury consumption.
With the first-tier cities becoming increasingly saturated, the competition is intensifying. Meanwhile, the markets in second- and third-tier cities are still evolving, offering significant value and growth potential. It's clear that the future of luxury retail in China lies not just in the big cities, but in the dynamic and promising markets of the smaller ones.