DFS Group to Develop Major Complex in China’s Hainan Targeting Booming Domestic Luxury Market

DFS Group, the travel retail arm of luxury conglomerate LVMH, announced plans on Tuesday to create a major shopping and entertainment complex on Hainan Island, China, a region known for its tax-exempt status. This development aims to capitalize on the growing tourism market, which has shown resilience even during economic downturns.

The ambitious project, described as an “unprecedented investment,” will span 128,000 square meters and is expected to open its doors by 2026. Visitors can look forward to over 1,000 luxury brands, including offerings from LVMH. The company forecasts that the complex will attract around 16 million visitors each year by 2030, providing a wide range of amenities, including shopping, dining, accommodation, and entertainment options.

This marks DFS’s first physical presence on the mainland, with the company currently operating 12 stores in Hong Kong and Macau. According to Nancy Liu, President of DFS China, this expansion is part of a broader strategy to strengthen the company’s commitments in the Chinese market.

The initiative reflects a growing recognition among global brands that affluent Chinese consumers are increasingly opting to purchase luxury goods domestically, especially in the wake of the COVID-19 pandemic. Hainan has become a key destination for high-end duty-free shopping and has maintained strong sales growth since the easing of strict travel restrictions.

Nevertheless, the country has experienced a post-pandemic economic slowdown, coupled with challenges in the job market for youth, which have impacted consumer confidence. While LVMH’s expansion indicates long-term optimism for the luxury sector in China, the economic landscape has shown only recent signs of recovery, leading to a sell-off in European luxury stocks amid softening demand.

Despite these hurdles, domestic tourism has thrived, emerging as a bright spot in consumer spending. With increased urgency for immediate satisfaction, Chinese residents are seeking new experiences, positioning Hainan to potentially surpass existing luxury shopping hubs like Hong Kong, which has seen a decline in importance for international luxury brands.

Benjamin Vuchot, Chairman and Chief Executive Officer of DFS, emphasized that the new complex represents a strong commitment to the long-term growth of China’s tourism market. He predicted that Hainan is on track to become one of the largest luxury retail markets globally within the next five years.