London: Iconic London department store Harrods will open a new private members club in Shanghai, the first of its kind outside the UK, in a bid to tap resilient demand from ultra-wealthy Chinese amid a slowing recovery in consumption.
The new club, called The Residence, will open at the end of this year on the second floor of Cha House, a central Shanghai heritage building where a Harrods tea room and bar, which are open to public, are already located. British celebrity chef Gordon Ramsay’s first restaurant in the Chinese financial and retail capital will be housed inside the club, where annual fees will start at 150,000 yuan ($21,000).
Chinese customers contributed 16 per cent of Harrods’ sales last year, Michael Ward, Harrods’ managing director told Bloomberg in an interview. Chinese luxury shoppers who mostly spent overseas before Covid have begun turning inward in the pandemic’s wake, as the range of domestic offerings grows and prices rise around the world - hindering their enthusiasm for leaving home.
“We always knew that shopping would go back to China,” Ward said. “We want to have a base to be able to maintain that relationship as we have really great customers in China.”
Chinese consumers are among the world’s most influential, accounting for about a fifth of the $325.4 billion global luxury market, according to PwC estimates. As they increasingly shop in the mainland, top global brands are expanding their domestic footprints.
Online luxury retailer Mytheresa set up its first Asian office in Shanghai last summer to provide on-the-ground personal shopping services to court locals who couldn’t visit overseas luxury hubs as Covid shut Chinese borders.
Still, offerings like The Residence are counting on big spenders to continue those ways despite increasing economic uncertainty in China, as a post-Covid rebound loses momentum and youth unemployment surges. China’s economy grew slower than expected in the second quarter, data released by the National Bureau of Statistics showed Monday, with worrying signs of a slowdown in consumer spending and ongoing pain in the property market prompting calls for more support from Beijing.
“Harrods services the top 1 per cent of the world’s wealth,” Ward said. “If I was in the mid market at the moment, I wouldn’t be doing this. But we know that the wealth in China will grow. And we will just continue to focus on those relationships with the very top of the top.”
