Lower-tiered cities driving growth in Chinese retail

While many retailers, especially luxury retailers, have focused on Tier 1 and 2 cities in China, such as Beijing and Shanghai, a recent study by Synovate shows that the purchasing power in the smaller and lower tiered cities is growing:


http://blogs.wsj.com/chinarealtime/2010/09/06/in-china-even-small-cities-spend-big/


“Tier 1 earnings are high but then so is the cost of living,” said Steve Garton, Synovate’s executive director. “Lower-tiered cities have a higher purchasing power.” 


The Chinese market is proving to be a gold mine for Luxury retailers, as the report suggests that Louis Vuitton has 17  "thriving" stores in tier 2 cities.


It will be interesting to see the growth in retail as the infrastructure in more cities is developed. A recent report by L2 Think Tank, suggests that the growth in retail e-commerce in China could result in some brands skipping building out physical stores, to focusing more on building out its online presence. 


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