China’s outbreak of a new strain of coronavirus is having ripple effects beyond its upending of daily life in the country. For the international luxury industry, which relies heavily on Chinese shoppers, it’s already taking a financial toll.
The outbreak has dramatically reduced the number of shoppers in Chinese cities and forced companies to close stores. Travel restrictions are also curtailing the normal flow of tourists to other destinations that usually host plenty of visitors buying luxury goods. Chinese shoppers make up about a third of global luxury spending, counting their spending inside and outside the country, according to management consultancy Bain & Company. That’s more than any other nationality.
The conditions prompted Britain’s Burberry to scrap its previously announced outlook for the year through March. Of its 64 stores in mainland China, 24 are closed, the company said in a statement (pdf). Those that remain open are working on reduced hours and have seen “significant” drops in traffic. While it said its business with Chinese tourists in Europe and other destinations had suffered less so far, it added, “given widening travel restrictions, we anticipate these to worsen over the coming weeks.”