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An Analysis of the Development Situation of Garment Brand Enterprises in 2010 (II)
In addition to local brands, the focus has expanded beyond domestic names in China's second- and third-tier cities. International and even luxury brands are now making their mark, showing strong interest in these emerging markets.
Luo Yingyi, executive director of Singapore Belle Retail Group, mentioned that the group’s first division, Yingwu Department Store, will open in Wuxi’s Zhongshan Road shopping district, bringing a range of high-end fashion labels. Following this launch, Yingwu plans to open 20 stores across 10 second- and third-tier cities, including Shenyang, Wuhan, and Kunming.
Li Yufang, an investor and executive director at Dalian Times Square, explained that while first-tier cities remain highly competitive for both domestic and international brands, the cost of entry is steep. In contrast, new commercial districts in second- and third-tier cities show great potential, though it may take time to fully develop the consumer base. “This is a perfect opportunity for us,†she said. “It’s also why Dalian Times Square managed to attract nearly 30 international luxury brands.â€
Notably, brands like PRADA, VERSACE, and FENDI have opened their first stores in Dalian, while others such as GIORGIO ARMANI, DIOR HOMME, LANVIN, D&G, and ANNASUI are entering the region for the first time.
The financial crisis has pushed many international brands to accelerate their expansion into second- and third-tier cities. According to industry observers, Chinese domestic demand is now driving the market, with the major luxury consumer base no longer limited to Beijing, Shanghai, and Guangdong. After the financial turmoil, first-tier cities struggled, but second-tier cities remained resilient.
Before opening in Dalian last year, DIOR HOMME had only one store in Beijing and Shanghai. “Despite the economic uncertainty, DIOR HOMME entered Dalian Times Square with a fresh approach,†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 three to five years. These cities are less sensitive to global economic fluctuations compared to Beijing and Shanghai. Their economies are driven by local businesses, resulting in more stable consumer spending.
In Li Dakan’s view, the retrenchment of multinational companies in first-tier cities has made consumers more cautious about buying luxury goods. Meanwhile, shoppers in second- and third-tier cities have shown stronger purchasing enthusiasm.
Another key factor is the rising per capita income in some second- and third-tier cities, which is growing faster than in first-tier cities. As a result, more people have disposable income and are more willing to spend on premium products. High-income residents in these cities are eager to match the lifestyle of big city dwellers and are increasingly interested in luxury brands.
With competition intensifying in first-tier cities, where the market is already saturated, the opportunities in second- and third-tier cities are becoming more attractive. The domestic market in these regions is still developing, and its value continues to rise.