FOR luxury retailers, a slowdown in growth in China ranks right up there with the news that Victoria Beckham has got enough handbags in terms of a catastrophe.
So after economic growth in the Asia powerhouse came in below expectations earlier this week and Burberry peer LVMH said lacklustre demand from Asia had hit sales at its flagship Louis Vuitton brand, investors must have been nervous.
But they needn’t have worried. Chinese customers – both at home and abroad – still seem to be flocking to iconic British brand Burberry, offsetting the drop in aspirational European spenders and justifying management’s decision to open eight more mainland stores in the next year. In the meantime, instead of panicking about the slowdown, the firm has been making the most of what its got.
Finance chief Stacey Cartwright called this “focusing on what we can control within the store environment, rather than what’s going on in the external environment”. In practice this means making smart decision like stocking up on red bags for Chinese New Year, and dropping cheaper lines in favour of top-end products to appeal to the most elite customers.
Against a backdrop of economic uncertainty, such decisions could seem flippant. But Burberry has already weathered consecutive quarters of slow growth in Europe, so it is unlikely to underestimate how macroeconomic events can hit sales.
As China keeps spending, focusing on these small but significant moves is exactly the right thing to do.