Ambience, safety and fun quotient combine to harness spending power

Florentia Village, a shopping village network for luxury goods operated by Italian company RDM Group, has seen a record business performance this year since launching operations in China a decade back. Florentia Village, which operates in seven locations in China, aims to further expand its presence as it believes there is huge growth potential for luxury retail.

This year's record sales come on the back of strong results in 2020(sales revenue: 10 billion yuan or $1.55 billion, up 7 percent over 2019), thanks to some 20 million visitors who stepped out of their homes for shopping as the COVID-19 pandemic was brought under better control in China.

During the weeklong National Day holiday in the first week of this month, Florentia Village saw sales across all of its shopping villages nationwide rise 30 percent year-on-year, while visitor traffic increased 11 percent over the pre-pandemic levels in 2019. Its e-commerce platform fvshop.com saw holiday sales surge 302 percent year-on-year.

"To some extent, COVID-19 has changed customers' lifestyles and shopping behavior tremendously," said Jacopo De Vena, managing director of Florentia Village and RDM Asia.

"Compared to crowded department stores in urban areas, customers who go shopping at outlets are able to keep a comparatively safe distance from each other, especially at Florentia Village, which is a kind of large outdoor mall concept, usually located on the outskirts of the local central business district.

"The number of middle-income Chinese consumers is expected to grow continuously. Their increased spending power, along with an understanding and desire for international brands, is just one of the reasons why we are so optimistic about the China market," he said.

Florentia Village now operates six shopping villages in the Chinese mainland: in Tianjin; Shanghai; Chongqing; Guangzhou, Guangdong province; Wuhan, Hubei province; and Chengdu, Sichuan province. It also operates an outlet in Hong Kong.

Florentia Village said it has been a witness to rapid economic growth in second-tier Chinese cities and a huge appetite for luxury goods and international brands from local consumers. Besides, a trend of opening more outlets at some third- and fourth-tier Chinese cities has emerged.

"The retail sector is certainly one of the industries most impacted by COVID-19, and the outlet sector has been no exception. We faced similar challenges to many other industries during the early days of the pandemic outbreak, when our Wuhan outlet was closed for several months and other shopping villages also had temporary closures for different lengths of time," De Vena said.

During such periods, Florentia Village saw an opportunity to leverage its digital resources and online channels such as its e-commerce website and WeChat mini program to connect with consumers and attract new ones. During the first half of 2020, its online shopping platform saw sales surge about 500 percent compared with the pre-pandemic period in 2019.

In 2018, the company entered China's e-commerce market with the launch of its official online shopping platform. It said the platform would create convenience for shoppers from regions where there are no physical outlets.

"The demand for luxury goods is growing very well in China. Chinese consumers have more knowledge and culture about the products. Beyond traditional luxury brands, they are looking for more niche brands and tend to learn about luxury brands online and purchase them at physical outlets," De Vena said.

"The majority of our customers are aged between 25 and 49, so most of them have families. We have opened family entertainment centers in our outlets in Guangzhou, Wuhan, Chengdu and Chongqing, as well as the newly opened Shanghai phase two project. They have proved to be successful in attracting families and kids."

Florentia Villages in Shanghai and Chengdu have expanded their operations and unveiled their second phase projects recently. For instance, the second phase development in Shanghai added 27,000 square meters of space, 110 new stores, 1,000 parking spaces and a family entertainment center.

Florentia Village said it will further expand its footprint in China next year by launching two more outlets in Shenzhen, Guangdong province, and Xiamen, Fujian province. "Over the past year, as China's economy recovered and the offline retail sector revived, the shopping village sector has been playing an important role in deepening China's dual-circulation development pattern.

"During this period, Florentia Village has recorded its best business performance in its decadelong history, pointing to an even brighter future for our company and the industry as a whole," De Vena said.