What: SKP has announced it will open a flagship in Hohhot, the capital of Inner Mongolia

Why is it important: the influential department store is beating a path into lower-tier cities

Local media reported that SKP Beijing garnered USD 2.7 billion in sales over 2020, surpassing famed luxury destination Harrods. And according to Beijing Business Daily, the high-end mall has been China’s top department store by revenue for the last ten consecutive years.

According to Bain & Company, China’s 2020 domestic luxury goods consumption went against the trend, predicted to achieve 48% growth (USD 53 billion). So the next piece of the puzzle for luxury brands and companies is where to find these new consumers in lower-tier cities.

Chengdu in particularly has emerged as a viable alternative to Shanghai and Beijing. Hohhot, on the other hand, is less of a safe bet yet, still tantalizing. Ten years ago, Louis Vuitton opened a boutique there in 2010 and shuttered four years later.

However, the demand for luxury goods in lower-tier markets is undeniable and its residents have seen their incomes rise. In 2019, Deloitte found that third- and lower-tier cities had shown strong spending growth and purchasing power. That same year, Seeco reported that these cities were highly-ranked in annual purchase frequency as well.

Is Hohhot Luxury's Next Hotspot