© Reuters. A girl walks inside Harvey Nichols, a London-headquartered multi-brand luxurious retailer, at Landmark, the upscale shopping center, in Hong Kong, China November 30, 2023. REUTERS/Tyrone Siu
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By Farah Grasp
HONG KONG (Reuters) – Hong Kong’s luxurious retailers are adapting to fewer rich Chinese language customers visiting the town and a shift in the direction of vacationers flocking to Instagram-coveted spots in fashionable districts quite than forking out on dear branded gear.
Earlier than the pandemic, the Chinese language particular administrative area had bucked world traits of declining demand for multi-brand department shops and ultra-luxury manufacturers largely resulting from its attractiveness to high-spending mainland guests.
However the rise of competing procuring hubs like China’s Hainan island, altering client preferences and an increase in on-line procuring have basically modified demand for luxurious items in Hong Kong and are beginning to reshape the town’s customer financial system, based on business specialists.
“The focus of visitors in Hong Kong has shifted from ‘shop till you drop’ to a greater desire for local culture and experience-based touring,” stated Rosanna Tang, an government director at Cushman & Wakefield (NYSE:).
In a single day and same-day customer procuring spend was at 55% and 18% of 2018 ranges respectively within the first half of the 12 months, stated Tang, prompting retailers to focus extra on meals and beverage shops.
British luxurious division retailer Harvey Nichols is on the forefront of the adjustments. Its proprietor Dickson Ideas stated final month it could surrender its lease on its flagship five-level retailer within the upscale Landmark mall within the metropolis’s centre after nearly 20 years.
“Chinese tourists coming to Hong Kong are no longer focused on shopping as they used to be before the pandemic,” the corporate stated in a press release.
There are additionally fewer guests, with arrivals recovering to only 60% of the degrees in 2018, earlier than anti-government protests in 2019 and stringent guidelines throughout the pandemic.
Hong Kong’s whole retail gross sales are down about 20% from 2018 ranges and in an effort to cut back the reliance on luxurious spending by Chinese language customers, the federal government and tourism sector are attempting to woo guests to nature and leisure points of interest.
Enterprise chambers and corporations are additionally attempting to rebuild ties between the West and Hong Kong after Beijing’s imposition of a nationwide safety regulation in 2020 and draconian COVID guidelines prompted an exodus of tens of hundreds of individuals.
The federal government stated this month that it’s growing a number of tasks from large-scale festivals to inexperienced tourism within the outlying islands and the creation of a climbing hub.
It stays unclear how efficient that technique will likely be to lure again spending. Luxurious lodge occupancy is powerful however on the again of the return of enterprise travellers.
Harvey Nichols closure comes after manufacturers together with Valentino, Burberry and LVMH’s Tiffany shut a few of their shops in Hong Kong, the place retail rents are the very best in Asia regardless of having dropped about 40% since 2019.
REPOSITIONING
Regardless of the closures, Hong Kong reclaimed its place as primary in per-capita spending on luxurious items this 12 months, forward of Switzerland and Singapore stated Euromonitor Worldwide, which expects the town to get well to its pre-COVID private luxurious items gross sales ranges by the center of 2024.
Snarled visitors has returned throughout industrial districts after a three-year lull, whereas drinkers and revellers are trickling again into the town’s bar districts.
Issues will enhance within the luxurious sector, stated Caroline Reyl Head of Premium Manufacturers at Pictet Asset Administration, which owns shares of LVMH, however it would probably be difficult to return to earlier ranges resulting from competitors from the Chinese language tropical island of Hainan.
“There was probably some over-distribution in the past,” she stated, that means that main luxurious labels over-saturated Hong Kong with their shops. “As some luxury brands have reduced their exposure to Hong Kong, that space will be filled by other brands.”
LVMH-owned Louis Vuitton is amongst these betting on the town’s future prospects.
Whilst shops stay quiet versus queues exterior pre-COVID, Louis Vuitton held a star-studded trend present alongside Hong Kong’s harbour final month to suggest a luxurious renaissance within the former British colony.
Chanel opened a brand new flashy two-storey retail area in Causeway Bay this 12 months, whereas De Beers and LVMH’s Bulgari each opened flagship shops within the in style Tsim Sha Tsui district.
Property developer Hong Kong Land, proprietor of the Landmark mall being vacated by Harvey Nichols, stated tenant gross sales and footfall in its metropolis centre malls have returned to pre-pandemic ranges.
On a current go to to the Landmark, crowds packed eating places and thronged the festive show areas within the foyer. Few, nonetheless, have been purchasing for designer gear.
“It’s a true shame that Harvey Nichols is leaving Landmark, but the fact of the matter is that they really have no business,” stated 67-year-old Sarah Ng, who was strolling via the mall. “It’s so high-end, but they have no customers.”
