Nevertheless, Scilla Huang Sun, head of equities at Swiss & Global Asset Management in Zurich, believes that longer term the weakening of the dollar against Asian currencies should play to the advantage of luxury goods groups that are increasingly reliant upon Asian consumers for growth.
“A fundamental strengthening of Asian currencies will strengthen the spending power of the Chinese consumer, which will favor the luxury goods industry,” she says. Chinese consumers make up 21 percent of the global luxury goods market and contribute 52 percent to its growth.
Tension between the buying power of Asian versus U.S. and European consumers is already evident in the shopping streets of Europe.
It is visible among the increasingly influential class of tourist consumers, who contribute about 15 percent to global sales and watch currency swings as closely as hemlines.
Luxury goods executives report purchases by Chinese consumers have increased as much as 90 percent in Europe in the past year, followed by Russians, while U.S. and Japanese consumers have fallen away.
In Italy, Chinese tourists contribute as much as 15 percent of total sales for some brands, from almost nothing two years ago.
In Cova, the ritzy coffee bar on Milan’s luxury shopping street Via Montenapoleone, snatches of conversation in Russian and Chinese are as audible as those in Italian. The diverse clientele has shopping bags stashed at their feet bearing the stamp of Prada, Gucci or Ermenegildo Zegna.
Gian Giacomo Ferraris, chief executive of Versace, said the “rise of affluent Chinese beginning to travel more” could only have “a positive impact” on the luxury industry.
Additional reporting by Scheherazade Daneshkhu in Paris and Haig Simonian in Zurich.