That, it seems, was the old Chinese tourist.
In what appears to be a rapidly developing trend, Chinese visitors to the United States are being noticed more for the flash of their newly-bought designer bags than that of their Nikons.
Tiffany & Co. (NYSE:TIF), Coach, Inc. (NYSE:COH) and Ralph Lauren (NYSE:RL) are just a few the companies in the luxury retail sector that have recently noted how higher revenue at their North American operations has largely been boosted by Chinese shoppers on vacation.
In a recent call to Wall Street analysts and investors October 25, Lew Frankfort, chairman and chief executive officer of Coach, Inc. noted the increasing revenue in North America was largely due to a sharp increase of tourists in select stores in travel markets around the country, including Hawaii, Las Vegas, Florida, and of course, New York.
It was only the latest company to chime in.
Roughly half of our U.S. sales increase in the quarter came from higher spending by foreign visitors, increasingly led by Chinese travelers, said Mark Aaron, vice-president of investor relations for Tiffany & Co., during a similar conference call August 26.
Polo Ralph Lauren Chief Operating Officer Roger Farah was even more effusive, stating in another conference call earlier in the year that quite frankly, the Chinese tourist is today the dominant influence in the gateway cities.
Farah's comments were especially forceful, not only in their tone, but in that they came as the answer to a question from Needham & Company retail analyst Christine Chen about the impact of the Japanese earthquake and tsunami on the psyche of Japanese tourists.
Indeed, the stories of Chinese tourists going on luxury shopping sprees abroad fall within the wider narrative of Chinese consumers stepping up their appetite for retail luxury brands. According to an October 17 report released by the Milan office of international management consultancy Bain Co., consumption of luxury-branded goods by mainland Chinese consumers is expected to rise 35 percent this year to €12.9 billion, by far the highest percentage increase of any national group. Even more remarkably, the growth comes on the heels of a 35 percent rise in demand last year.
When Chinese consumption in Macau, Hong Kong and Taiwan are factored in, the amount Chinese are expected to spend on luxury products at home is some €23.5 billion. Bain Co. estimates another €12 to €15 billion are spent by Chinese consumers while abroad.
The reason why such a high proportion of that spending happens outside of China comes down to taxes. The People's Republic taxes foreign luxury goods a rate as high as 50 percent.
The appetite for luxury of Chinese tourists on vacation has also been noted by retailers in other countries recently. According to an October 27 Financial Times article, analysts have long known that high proportions of Burberry's London and European sales are driven by sales to wealthy tourists.
Also in October, Harrod's, which operates a landmark 7-floor department store in London's Knightsbridge neighborhood, reported sales had been driven up by Chinese tourists, who, on average spend £3,500 per store visit.
And an HSBC report from September noted high-end retailers in Hong Kong were so mobbed by Chinese mainlanders on vacation that they'd taken to calling them walking ATMs.
Back in the U.S., analysts are predicting the revenues brought in by Chinese tourist have nowhere to go but up. Some have noted, for example, that American luxury store operators have not been as open to the interest of tourists as they could be, neglecting to provide the Chinese translators or Mandarin signage their London counterparts sometimes provide.
There's also the fact it is sometimes remarkably hard for Chinese tourists to receive a visa for travel to the United States.
On that last point, the luxury retailer industry has put some pressure, lobbying the government to ease restrictions. Saks chief executive Stephen Sandove has been especially vocal.
You look at Printemps or Harrods and 30 to 35 percent of the business is Chinese tourists, Sandove told fashion industry magazine Women's Wear Daily in an April interview. It's unbelievable ... I'd like to see visa issues eased up so they'll come here.
As he emphasized, on an industry summit some weeks late, according to Reuters, The Chinese love brands, and they travel, too.