Even in sluggish markets, though, retailers will find profitable niches, such as selling luxury products to the very rich. As populations age—one in seven Americans will be over 65 in 2014—the desire for certain items (skin-care products to hide wrinkles, for instance) is rising.
Wealth, undeniably, is moving east but China’s slower rate of growth is causing concern; so too is a campaign to discourage showy displays of affluence. Some firms will indeed suffer; many Chinese luxury malls will remain disconcertingly empty. But the outlook is brighter than these forecasts may suggest. In 2014 five Chinese cities will join the four that already boast 100,000 or more denizens with incomes over $25,000. The newly affluent will travel to ever more foreign places, where they can splurge on luxury goods that are taxed at much lower rates than in China.
To watch: Boots on the ground. Burberry, a clothing retailer, is convinced China is still the place to be, after watching sales rise by 20% in the year ending March 2013. The company’s popularity among the wired Chinese nouveaux riches owes something to its online savvy—it has more than half a million fans on Sina Weibo, a Twitter-like service—but probably more to its physical presence in 35 Chinese cities.
From The World In 2014 print edition