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Today marks the start of the Lunar New Year of the Rabbit. As the Chinese holiday season kicks off, luxury shoppers are expected to rush back to luxury stores with the same speed as the lop-eared animal they are fêting. After three years of lockdowns and repeated restrictions on personal freedoms and movements, they are eager to travel again and spend money.

That’s the expectation of a dozen investors, store managers and luxury goods executives who spoke to Miss Tweed in the past week. Since China announced in December it was putting an end to its zero-Covid policy and re-opened its borders on Jan. 8, luxury shares have rallied. LVMH stock reached an all-time high this week. The giant that owns Louis Vuitton, Dior and more than 75 other brands became the first European company in history to be valued at more than €400 billion. It is now the 12th most valuable company in the world, according to Bloomberg. LVMH CEO Bernard Arnault, who owns just under 50 percent of the company, is now the world’s richest man. However, Arnault’s elevation has also been aided by the wealth tumble taken by Elon Musk, the former world’s richest man, as a result of his takeover debacle at Twitter.

But the long Covid lockdown in China has meant that while the luxury goods industry is hopping with anticipation about the expected surge in spending, there will be obstacles to overcome for Chinese luxury shopping to return to its 2019 levels. From curtailed airline travel to a lack of Mandarin speaking sales staff in luxury boutiques, the road to Chinese luxury sales recovery will be a bumpy one.

“It’s going to take us at least a year to be completely up and running vis à vis the Chinese clientele,” the CEO of one of the biggest luxury brands told Miss Tweed on condition of anonymity.

Still, the new year of the Rabbit is expected to serve as a starting gun for luxury sales in a way it has not done since before the pandemic.

Jonathan Siboni, CEO of the luxury data analysis firm Luxurynsight, said that his firm’s data shows business in China has already picked up for many luxury brands since the beginning of the year. Next week is when the rush should start as the Chinese are on holiday. “I think business for luxury brands in China is going to be very brisk over the next few weeks,” Siboni said. Those Chinese coming to Europe this month have been mainly professionals with easier access to visas, like wholesale dealers buying products for department stores and online retailers in China, he said.

What is certain is that, as was increasingly clear before the pandemic, the winners in the race to bring Chinese shoppers back into stores are likely to be the biggest brands with the strongest financial firepower. At the summit sits LVMH. When LVMH publishes annual results next week, analysts expect weaker sales growth than earlier in the year, but the group should cheer up investors with upbeat comments about business in China gaining momentum.

Having a store network in China has again become crucial. Many Chinese over the holidays are expected to travel domestically to see family and friends. Only a minority intend to leave the country during the festive period, China-based English-speaking media have reported. Louis Vuitton has 50 shops in mainland China and around 7 in Hong Kong.

Less than one million passports in China were issued in 2022 compared to dozens of millions pre-Covid, according to official statistics. Chinese authorities have warned those who wished to leave the country that if they did, members of their family who stayed behind could get into trouble. Chinese officials are not allowing entire families out of the country. They want to make sure they come back, local sources have said.

“It’s like the Berlin Wall that has just opened for the Chinese,” explains David Baverez, a China columnist for several media such as France’s L’Opinion. “China will open internationally but those trying to leave will have strings attached.” Baverez expects China’s regime to harden in the coming months. “The Chinese do not like seeing capital leaving and not coming back,” he said.

Regardless of whether their store network is ready for Chinese visitors, luxury brands have been seeking to wet their appetite by printing rabbits on every type of product to mark the new year. Mulberry is selling handbags with prints of Miffy the Rabbit on them. Hugo Boss sweaters feature Bugs Bunny. Versace sells T-shirts with its own character Biggie Bunny.

The importance of Chinese shoppers remains crucial for brands. The dependence of Richemont on China became evident again this week when the group that owns Cartier and Van Cleef & Arpels blamed the country’s zero-Covid policy and store closures for weaker-than-expected sales for the three months to Dec. 31. “The impact from China is massive, but we see it as temporary,” said Jean-Philippe Bertschy, luxury goods analyst at Swiss brokerage Vontobel. “The catch-up from Chinese consumers will come as strong as sales decelerated in the (fiscal) third quarter, as they were able to save money during the lockdowns.” Richemont’s investor relations office told analysts: “Following the peak of the massive Covid wave in the major cities in China, stores have reopened, traffic has come back and we are experiencing a strong retail rebound pre-Chinese New Year.”

Burberry, which also published a trading update last week, said it had seen a drop in traffic in stores in China in December, but those recovered in January. “We've had more Chinese consumers that are moving into Hong Kong, and also Macao is showing very good signs, very good green shoots,” Burberry CEO Jonathan Akeroyd said in a conference call with analysts. “These tend to be the first areas that will improve. Hainan is another one. And then, it usually goes into the rest of Asia, and then it goes into Europe.”

Gucci owner Kering publishes its annual results on Feb. 15. As well as anticipation over its China outlook, there’s also high expectation about whether the French group will name a replacement for Gucci’s star designer Alessandro Michele who abruptly departed end-November. Investors expect a new design-led renaissance at the brand could be another attraction for Chinese shoppers as they make their way back to European stores.

In the 1990s, the Japanese were luxury brands’ biggest customers. Twenty years later, they were outnumbered by Chinese nouveaux riches eager to show off their wealth and success. Before the pandemic, luxury brands constantly tracked and analyzed Chinese tourists’ whereabouts and travel patterns. With the country’s re-opening, those studies will resume.

Many store managers and industry experts contacted by Miss Tweed do not expect Chinese shoppers to arrive in Europe or the United States before the early spring due to airline capacity constraints and waiting times for visas and passport renewals. Luxury boutiques in Milan, Paris or London may have to wait until the summer to see a strong inflow of Chinese tourists, those people told Miss Tweed. Global air traffic will take up to a year to come back to its 2019 levels and for China, international traffic will lag the busy domestic market as airlines gradually restore service, say airline industry analysts.

The airline industry has been shattered by the pandemic. Even if there is demand and the airlines want to expand capacity quickly, they cannot because there are not enough planes. Too many have been grounded and now the industry is struggling to get them to fly again and source all the spare parts they need due to supply chain disruptions. China ending its zero-Covid policy from one day to the next has taken the industry by surprise, airline industry experts say.

Luxury industry analysts forecast that after travelling within China, the next stop for Chinese shoppers will be places like Hong Kong, Macau and South Korea. Dior and Louis Vuitton have been pulling all the stops in China and South Korea. Dior this week replicated the Avenue Montaigne flagship in ice in the upmarket resort at Lake Songhua Seibu Prince Hotel in in Jilin province, China, not far from Harbin and Vladivostok. Dior did its first show in South Korea last year and opened a new concept store in the capital where it has built a futuristic-looking flagship.

Japan is also high on Chinese shoppers’ wish-list as the weak yen has made luxury goods cheaper than at home. Louis Vuitton has been rolling out an impressive worldwide campaign with Japanese artist Yayoi Kusama, decorating entire buildings with her work in many big cities. Doubtful of the efficiency of the home-made vaccine, affluent Chinese are also traveling to Thailand where they can get a Pfizer shot for $400. The first Chinese tourists back to Bangkok this month were greeted with flowers and welcome packages in front of government ministers, international media reported.

This week in Europe, in spite of the cold wave, there were many tourists queuing in front of luxury shops. Only a handful spoke Mandarin.

“I think the Chinese consumer will not come back to Europe in droves but in small numbers,” said Antoinette Lemens, founder and head of the head-hunting and retail specialist firm Lemensearch. “However, department stores and flagships should get ready for their return.”

Paris department store Galeries Lafayette, who did great business with Chinese shoppers before the pandemic, said it was too early to get prepared for their return. Meanwhile rival Printemps said they were not planning anything specific to welcome more Chinese customers. London-based Selfridges declined to comment.

Managers of luxury boutiques are starting 2023 in a relatively serene state of mind, having enjoyed a bumper year in 2022. They worked well with the local clientele and with U.S. and Middle Eastern tourists. But this aloofness may play against them as they need to prepare for the inflow of Chinese shoppers. Many boutiques in the West have lost their Mandarin-speaking staff during the pandemic. It will take them months to recruit new ones.

Bulgari is one of the few luxury brands that does not force customers to wait outside in a line. The brand’s flagships are spacious enough to welcome many guests. “Making someone wait outside in the cold is not really providing a luxury service,” said Jacopo Facchetti, manager of Bulgari’s Rome flagship housed in an 18th century building in the heart of the Italian capital. “If you have the space, it’s so much better to invite customers to come in, especially when we have a museum inside like in Via Condotti.”

Facchetti is of many luxury store managers who have adopted a “wait-and-see” attitude regarding the return of the Chinese. “We are not planning on making any major organizational changes,” Facchetti said. “For the moment, the reality is that Chinese customers are not back yet, partly due to lack of air connections. But if traffic comes back to 2019 levels, then of course we will need to recruit more sales advisers.” He said the boutique was hosting an event for Chinese customers on Friday and Saturday in honor of the New Year. Despite the absence of Chinese customers since 2020, Facchetti said his boutique had managed to roughly double sales last year thanks primarily to local customers and more recently foreign shoppers from America and the Middle East.

Nicolas Rebet, head of the consultancy Retailoscope specialized in luxury retail and customer experience in-store, just came back to Paris from a week in New York. He said he did not see many Chinese shoppers there either. As in Paris, London or Milan, the only ones to be seen are mainly local Chinese.

DON’T FORGET LOCALS

However, once Chinese tourists do return to Western shopping meccas, Rebet said luxury brands would be well advised not to forget their local clients who supported their business in the past three years. If they do, they will regret it as foreign customers come and go. And for sales assistants, tuning back into the specific needs of the Chinese clientele is not going to be that easy. “Chinese customers are known for being quite transactional in their approach. They do not have much time. Therefore, product availability will be key.”

Jonathan Siboni from Luxurynsight, believes there is a lot of room for improvement in the way luxury brands welcome Chinese tourists. There are many things they can do,” he said. “Simple things like offering them a cup of warm water as they enter and giving them a Wifi code so they can connect on WeChat and check what products they want.” Many flights from Asia arrive in cities like Paris, Milan or London early in the morning, Siboni remarked. But most luxury shops do not open before 10:30. If they welcomed Chinese shoppers an hour earlier, they would do solid business during that one extra hour, he argues.

With the Chinese consumer so crucial to the luxury industry, an earlier wake up seems worth it.