全球奢侈品：中国之行的10个关键要点

Global Luxury Goods: 10 Key Takeaways from Our Trip to China We have been on the road with a group of investors in Hong Kong and Shanghai to meet withpublic and private companies, retailers, industry insiders, to get the temperature of the luxury Luca Solca+41 582 723 126luca.solca@bernsteinsg.com Maria Meita+44 20 7170 0540maria.meita@bernsteinsg.comEric Chen, CFA+852 2123 2628eric.chen@bernsteinsg.com 1. Chinese luxury demand is stabilising from a weak base and remains highlypolarised, with very strong top-end spending and still-fragile middle-class demand. The high end continues to spend on luxury goods, travel and hospitality, but this is nottranslating into a broad-based rebound, as middle-income consumers remain cautious,more selective and less willing to stretch for big-ticket, logo-heavy purchases. Yi-Peng Khoo, CFA+44 20 7676 6822yi-peng.khoo@bernsteinsg.com 2. Hong Kong is a bright spot, supported by local consumers and the return oftourists.A firmer residential property market and rising transaction volumes are feedinginto a “feelgood” factor, which, combined with 11 months of retail sales growth and Specialist Sales Alix Turner+44 20 7762 4044alix.turner@bernsteinsg.com 3. Mainland tier 1 cities show early but uneven improvement, helped by signs ofproperty stabilisation.Transaction volumes are up in Tier 1 cities and there is some pricerecovery, but meaningful price appreciation is concentrated in the very top, prime locations, 4. Oversupply of malls and stores continues to weigh on the market, keepingpressure on weaker locations and formats.Luxury retail consolidation is firmly on theagenda, with brands closing underperforming doors, shrinking footprints and concentratingon a smaller number of highly productive, flagship-type locations in the best tier 1 malls (see 5. Brand polarisation has intensified: Hermès, Louis Vuitton, Chanel, Van Cleef & Arpelsand top Swiss watch maisons remain very strong, while many tier 2 and tier 3 brandsstruggle to maintain relevance and productivity. In practice, this means the strongesthouses are still able to expand space, hold price and invest in experiences, while weaker 6. “China for China” is now central to strategy, with global brands localisingassortments, storytelling and clienteling rather than simply importing global playbooks.Examples range from tailoring product and pricing to Mainland consumers, to buildingWeChat-centric CRM, local KOL partnerships and lifestyle ecosystems (cafés, museums, 7. Local brands have become serious competitors in beauty, RTW and jewellery,especially at entry price points.Songmont and Grotto in leather goods, Laopu injewellery, and domestic beauty brands such as Mao Geping and others are winning shareby combining credible product with strong cultural storytelling, digital engagement and … continued from the first page 8. In the context of subdued middle-class demand, global brands are leaning heavilyon creative activations and experiential formats to defend pricing power and shareof mind.High-impact examples include The Louis in Shanghai, craftsmanship events (e.g,Hermes), and branded pop-ups that turn stores and malls into destinations rather than 9. Pressured middle-class consumers are clearly value-conscious, trading downwithin brands or into outlets and local brands.Years of price increases have madeshoppers far more price aware; instead of absorbing further hikes, many choose entrySKUs, factory outlets, second-hand platforms or well-positioned Chinese brands that offer 10. For listed names, the field trip supports a more constructive stance on thestrongest global houses but reinforces caution elsewhere.Louis Vuitton, Dior andRichemont’s key maisons look well placed to navigate a selective recovery, while Keringand more middle-class dependent or tier-2 brands still lack clear evidence of sustainable BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS The trajectory of a recovery in global luxury demand remains uncertain. We find two sources of volatility at play: a) underlyingdemand gyrations, as consumers navigate a fragile macro-economic environment and a tenser and tenser geopoliticalenvironment; and b) short-term investors playing the sector long and short, amplifying upswings and downswings beyond 1)We would prefer high-quality names “at fair value”...Richemontis our top preference due to strong jewellery momentumand leadership, withBrunello Cucinellialso favored for their quality and potential mean reversion. It is difficult to be positiveonHermèsin the short-term, but one weak quarter can be forgiven by the market, if they return to high single digit growth 2)...as well as the self-help stories with more promising trajectories.LVMHsits between high quality and self-help. Lingeringconcerns around the W&S turnaround and the Arnault family’s ‘Darwinian’ succession process are counter-balanced by Dior’srevival, cost efficiencies, and Louis Vuitton’s strength; Turnaround atBurberryis well on track. On