This unidentified photo shows a K 11 mall in Wuhan, Hubei province. K 11, a subsidiary of New World Development, said it plans to build 21 new projects nationwide by fiscal 2026, with a focus on the Guangdong-Hong Kong-Macao Greater Bay Area, as the company is bullish about the growth potential of consumer spending.
K 11 in Hong Kong said it expects to achieve a compound annual growth rate of 30 percent between fiscal 2021 and fiscal 2026.
The Hangzhou Wangjiang New Town project, due to open in 2026, is one of the company's major projects. It is the first such project in the province of Zhejiang province.
China is home to more than 4,000 shopping malls, a number that is three times that of the United States. The Chinese Academy of Social Sciences report says the number is expected to grow to 10,000 by the year 2025.
According to Statista, Chinese consumers are projected to spend 1.2 trillion yuan US $166 billion on luxury goods by the year 2025.
Due to COVID 19 consumers on the Chinese mainland are shifting their luxury spending back home. Adrian Cheng, the chief executive officer of New World Development and founder of K 11 said they are becoming more discerning and seeking hyper-relevant luxury experiences while leveraging local resources.
Millennials and Generation Z consumers are expected to be a key growth driver in the Chinese luxury industry, with a higher standard for local relevance of brands. Cheng said that brands will have to engage with this fast-evolving demographic through innovative technology and retail.
The K 11 franchise includes a range of museum retail concepts that are targeted at consumers in younger generations, such as K 11 Art Mall and K 11 Select.
The K 11 Craft Guild Foundation organized an art exhibition at the Shanghai K 11 Art Mall earlier this month. The show, named K 11 Voyage de Savoir-Faire and centered on Chinese traditional craftsmanship, has attracted a large number of visitors. The exhibition will be launched later this year in Wuhan, Hubei province, Guangzhou, Guangdong province, Shenyang, Liaoning province, Hong Kong and Paris.
K 11 maintained a strong sales growth and high occupancy rate in the second half of 2021. The occupancy rates in the first-tier cities reached 92 percent during the period. Sales in K 11 malls grew 39 percent year-on-year, when the market's average growth rate was 4 percent year-on-year, the company said.
The sales of K 11 Select in Wuhan's Optics Valley grew 65 percent year-on-year in the second half of 2021, it said.
K 11 said it is continuing to develop large-scale integrated projects that combine retail, residential and office space.
According to a report by Bain Co, China will become the world's largest luxury goods market by 2025 and Chinese consumers are likely to make up nearly half of global spending in the sector.
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Prior to the epidemic, Chinese travelers had fueled luxury spending in Europe and the US. The consultancy said that luxury consumption in China will be supported by a backflow of spending and the gradual reopening of international travel.
The luxury market in China was affected by the COVID 19 resurgence, but we expect luxury product shopping by consumers to recover to pre-COVID 19 levels between the end of the year-end and the first half of next year, said Xing Weiwei, partner of Bain Co.