Luxury Home Brands Bank on Resilience of Chinese Elite

MILAN — China’s economy slowed in the third quarter, its property market is still in a fragile state and consumer confidence hasn’t quite recovered since the COVID-19 pandemic. But the economic doldrums aren’t stopping luxury home brands from betting on the world’s second-largest economy to fuel growth.

Versace Home, for example, currently has 10 retail locations in China, comprising both monobrand stores in Shanghai, Hangzhou, Zhengzhou and, most recently, Xi’an. Its licensee, Luxury Living group, said that over the next three years its plan is to strengthen Versace Home’s presence, expanding with additional monobrand stores in key first-tier cities such as Beijing, Chengdu and Shenzhen, and introducing more multibrand locations in select second-tier cities.

Luxury Living, which also produces for Dolce & Gabbana Casa, Trussardi Casa, Bentley Home, Bugatti Home and Luxence, is confident about the resilience of China’s high-end consumer.

“The current landscape in China is driving luxury brands to rapidly adjust to shifting economic conditions and evolving consumer preferences. As China remains a pivotal market for luxury, brands are reevaluating their distribution strategies to place greater emphasis on enriching the customer experience through flagship locations,” Luxury Living chief executive officer Andrea Gentilini said in an interview.

Gentilini commented on the fact that, within the Chinese economy, the design industry is firmly linked to real estate, especially the luxury real estate market in first-tier cities, whose trends directly influence luxury furniture sales. “This has been a particularly challenging year, but these openings are crucial to driving the recovery anticipated for 2025,” Gentilini added.

Hope Ahead

Since September, the Chinese government has unveiled stimulus measures such as monetary policy easing policies and plans to counteract the property market’s decline. Analysts at Nomura’s China economics team lifted their GDP forecast for the fourth quarter this year to 4.4 percent compared with the same period in 2023, while retaining its 2025 GDP growth forecast at 4 percent. “If property investments increase as a result of fiscal stimulus for the property sector, it could broaden Asia’s exports recovery and lift commodity prices,” the bank said in its October Asia Economic Monthly report.

The Key to Enticing Consumers

Gentilini said that engaging customers takes effort and involves leveraging exclusivity, innovation and offering personalized experiences. It also involves penetrating a younger, affluent demographic through local digital platforms like WeChat and Red.

Engagement was key for Salone del Mobile.Milano organizers, who have amped up their focus on China since last year. In November they cut the ribbon on an exhibition in Shanghai, “The Orbit’s Orbit,” that aimed to bolster the presence of Italian design in the key Asian market. In an iconic building designed by U.K.-based Heatherwick Studio, more than 65 pieces of design from 36 leading Italian brands were placed around the room, forming what the artist and curator of the show Matilde Cassani called “an imaginary home.” Local dancers were brought in to create a piece of “human architecture” with an island made of bodies.

The Shanghai exhibition was part of the 2024 West Bund Art & Design, an annual art fair that brings together more than 120 global galleries and stages art events across the West Bund Cultural Corridor.

In 2023, Salone del Mobile’s president Maria Porro also traveled to Shanghai on a Salone del Mobile promotional tour. Salone del Mobile.Milano debuted a Shanghai edition of its fair in 2016 at the Shanghai Exhibition Center in what unfolded as an exhibition designed to introduce Chinese consumers curious about design to the Italian Way of Living.

The last edition, which took place before the COVID-19 pandemic, was envisaged as a showcase for Made in Italy products in Shanghai. It remains to be seen whether organizers will make a return to China though engaging with the Chinese market remains a priority.

In a report by design fair organizer Salone del Mobile.Milano, Italian furniture exports to the Asian country were valued at more than 479 million euros in 2023, a 17 percent decrease versus 2022. China ranks number seven, while France is number one, followed by the U.S. and then Germany. In addition, Salone del Mobile.Milano said China ranked number one in terms of foot traffic at the 62nd edition of the fair in April. In total 370,824 people flocked to Fiera Milano, Rho for the event. However, a report by Italian Statistics Bureau Istat painted a more grim picture and said overall, Italian exports to China fell 7.6 percent in August, ranking second among the countries registering declines, next to the U.S., which saw exports plummet 23.1 percent.

Understanding the High-end Consumer

Another company placing big bets on China is luxury Italian linens firm Frette, which was bought by Raza Heritage Holdings in 2023 in a club deal that involved a consortium of private investors including Chinese billionaire Ding Shizhong, chairman of Anta Sportswear, one of China’s largest sportswear-makers, and Hong Kong businesswoman Adrienne Marie Ma, the former president of Joyce Boutique Group Ltd. Ma and Shizhong have a large network of contacts in Greater China and Hong Kong, exactly where Frette is looking to expand with directly operated stores.

“As a luxury brand, we see the China market as a new and exciting opportunity for Frette. We are experiencing a growing demand for our beautiful collections and remain confident in Frette’s bright future, independent of broader market trends,” Frette’s CEO Filippo Arnaboldi affirmed in light of the economic data.

Cassina’s next store opening in China will be in Zhuhai, a city of 2.44 million inhabitants, and additional units are planned for 2025.

“Resilient is a good description of the Chinese market. It has undergone transformative changes, with local enterprises rapidly emerging and expanding domestically. Haworth Group and our brands see opportunity for more growth with a new Cassina store in Zhuhai and new spaces in Dalian, Taizhou, Changsha and Tianjin next year. Zanotta will also open a store in Hangzhou,” said Luca Fuso, CEO of Cassina and Zanotta. In addition to Zanotta and Cassina, Haworth Lifestyle Design group (formerly known as Poltrona Frau Group) owns Cappellini, Ceccotti, Karakter, Poltrona Frau, Luxury Living, Janus et Cie, lighting and accessories brand Luminaire and Interni, among them.

Laying Roots

In June, Italy’s Molteni&C opened its largest flagship in the world in Shanghai with local partner Domus Tiandi.

The store, situated in a Brutalist architecture landmark, spans almost 38,000 square feet across two floors. The space, which includes a showroom for Italian office furnishings company UniFor, “is expected to play a strategic role in the expansion of Molteni&C in China,” the Molteni Group said in a statement at the time. Domus Tiandi is China’s largest and most comprehensive design service provider of high-end imported furniture.

China expansion is also heavily woven into upscale French furniture-maker Roche Bobois’ growth story.

Outside of its top markets, the U.S. and France, Roche Bobois is fortifying its position in the Chinese market in order to better tap into its growth potential. It particularly has its eye on rising commercial and industrial cities like Chongqing and Chengdu that have 8 million to 9 million inhabitants and that it sees offering major opportunities. As a single market, China teeters between Roche Bobois‘ third and fifth top markets. “The goal is for it to be top three,” its international director Martin Gleize told WWD in July.

“These kinds of places are second-tier cities but they are huge. So we are very small compared to the size of the city and the business we do is very small still there. It’s about establishing the brand and taking the time to drive organic development,” he added at the time, emphasizing the sector’s heightened interest in smaller cities of even 5 million inhabitants.

Also in July, Roche Bobois Group bought a majority stake in Shanghai Rock Castle Furniture, its lucrative franchisee in China. The local franchisee currently directly operates two Roche Bobois stores in Shanghai and one in Beijing, and manages 25 franchised stores located in various midsized cities.

Luxury Living’s Gentilini echoed the efficacy of this strategy. “With the rise of affluent buyers in cities beyond traditional luxury hubs like Beijing and Shanghai, brands are expanding into emerging regions to better engage with this growing and diverse base of consumers.”

Looking ahead, market watchers will keep their eyes on the evolving trade policies of President-elect Donald Trump and how that will impact consumer confidence and the overall Chinese economy. Trump has said he would implement tariffs as high as 60 percent on Chinese goods, with the lingering threat to raise them even higher.