* Over half of 23 surveyed brands see lower tourist demand
* Chinese account for about a third of European luxury sales
* Tax refund data, watches exports also point to slowdown
By Astrid Wendlandt
PARIS, April 2 At the seven-story retail temple
that is Louis Vuitton's flagship store in Paris, there are signs
of a slowdown in spending by Asian tourists - the recent driving
force in a European luxury market defying recession.
"We don't have as many Chinese as before," said one shopping
clerk at the world's biggest luxury brand by sales. "I think the
whole year is going to be slow."
And Louis Vuitton, owned by industry leader LVMH, is not
alone. Over half of 23 brands surveyed by Reuters at stores in
London, Paris and Milan - including Gucci, Hermes and Jimmy Choo
- reported lower demand from tourists, notably from Asia.
That could be a big problem in a European industry where
Chinese shoppers account for about one third of luxury
purchases, and where travellers represent up to 70 percent of
buyers in segments such as watches and jewellery.
Most luxury goods groups will not publish first-quarter
figures until at least later this month and LVMH
declined to comment on tourist spending patterns.
But anecdotal evidence is growing of at least a temporary
slowdown in spending by travellers, which analysts say could be
linked to worries about the global economy and tax increases in
Europe, as well as the tough stance taken by China's new
president Xi Jinping on illegitimate gift-giving.
Brands whose store clerks told Reuters they had seen fewer
tourists in recent weeks also included Bottega Veneta, Chloé and
Christian Dior in Paris; Longchamp and Ermenegildo Zegna in
London and Valextra in Milan.
"We have seen a slowdown in tourists buying, particularly
Asian tourists," a saleswoman at a Christian Dior shop, another
LVMH brand, in central Paris said. "The trend was fairly solid
until September-October 2012 then it slowed down progressively".
At a Gucci boutique in central Paris, assistants were
milling around, waiting for customers. "There has been a noted
drop in footfall since the beginning of the year," one shopping
assistant said. "It is true, these days we see fewer tourists."
The survey suggested, however, that business remained brisk
at Chanel, Lanvin and S.T. Dupont in Paris and at
Trussardi in Milan.
If tourist demand falls, brands with major flagship stores
in European capitals such as Burberry, Gucci, Christian
Dior and Louis Vuitton, would be most affected,
"A drop in tourist demand would impact their like-for-like
sales," said one London-based luxury analyst who declined to be
named, adding he had heard informally from industry sources that
trading had worsened in Europe recently.
Price increases by brands seeking wider margins could be
another factor affecting demand, at least in some cases. Louis
Vuitton lifted prices on some of its popular canvas bags by
around 10 percent in the euro zone.
Other, more temporary factors may also be at play.
Unusually cold weather in Europe, particularly in March,
contributed to weak demand for spring/summer ready-to-wear
collections already on offer in the shops, clerks said.
Tourist spending has become a hot topic for the industry
since British handbag maker Mulberry issued a profit
warning last month, which it partially attributed to a drop in
tourist spending in London.
Although many European brands make most of their sales
elsewhere, their home region is still usually a vital market.
Europe represents over 30 percent of total turnover for
groups such as LVMH, Richemont, Swatch and PPR
, the group which owns Gucci and Yves Saint Laurent and
will change its name to Kering in June.
Official data on tourist numbers and spending usually take
several months to emerge. But there are some signs to support
the anecdotal evidence.
In Britain, the Office of National Statistics said tourist
numbers were down 1 percent in January, after a strong November
Data from tax refund company Global Blue, meanwhile, point
to a moderation in spending growth by travellers.
Total sales to tourists in Italy, for example, rose 7
percent in February, compared with an increase of 19 percent in
January and February combined, and a rise of 32 percent in
December, Global Blue said.
"A slowdown was expected and it is just happening," said a
sale assistant at Valextra, the Italian maker of coloured
leather handbags with a price tag of above 800 euros.
Italy's retail association Confesercenti forecast a decline
of between 10 and 15 percent in the arrivals of tourists to the
country for the Easter holidays this year compared with 2012, as
a deep recession drags on.
In France, growth in spending by the Chinese nearly halved
between October and February this year to 38 percent from 62
percent, according to Global Blue.
In Switzerland, spending by the Chinese rose 4 percent
during the same period, against an increase of 33 percent, the
previous year, the tax refund company added.
Another good indicator is Swiss watch exports. Exports to
Greater China, including Hong Kong, fell 27 percent in February,
the worst monthly performance in three years, compared with a
rise of 4 percent in January and a 20-percent drop in December.
"Certain Chinese buyers will have to be more discreet about
the watches they purchase," said Jean-Marc Jacot, chief
executive of Swiss luxury watch brand Parmigiani Fleurier,
referring to the crackdown by the Chinese government on