Not so long ago, premier Hong Kong shopping districts such as Causeway Bay witnessed an exodus of major retailers, with the likes of Rolex, Omega, Kiehl’s, and J. Crew shuttering stores as the city’s tourist numbers plummeted during Covid-19.
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But it appears brick-and-mortar is on its way back in a big way in Hong Kong, as a string of new openings heralds the return of travellers.
Luxury brands such as Chanel, De Beers, and Van Cleef & Arpels are making renewed investments in physical locations on prime commercial real estate.
The South China Morning Post and local newspaper Ming Pao earlier reported Chanel has signed a three-year lease for a 19,000-square-foot ground-level location in Causeway Bay’s Capitol Centre at over HKD3 million (more than USD382,000) per month, beginning mid-May.
A CBRE study detailing Hong Kong’s retail figures for the first quarter of the year reported improving consumer sentiment and growth of 17.3 percent in retail sales in January and February, up HKD69.3 billion (around USD382 million), the highest total for the period since 2019.
“The recent influx of tourists during Labour Day Golden Week showed signs of recovery for the retail sector after the pandemic. Increase in the mall’s footfall, interactive experiences, and instant shopping also signal the uniqueness of physical retail that cannot be replicated elsewhere,” says Ricky Lui, executive director and chief operating officer of Hysan Development, which operates retail and office properties such as Lee Gardens and Hysan Place in Causeway Bay.
Among Hysan Place’s retail anchor tenants are Cartier, Chanel, Dior, Hermès and Louis Vuitton.
Lui notes, “Multi-storey flagship stores in malls are highly valued by customers who seek variety and the best shopping experiences.” He adds several of Hysan’s luxury retail anchor tenants plan to begin expanding and upgrading their shops, “with an aim to strengthen their presence and exposure in our portfolio.”
Luxury cosmetics brand Aesop, which already has a number of locations across the city, unveiled a redesigned two-storey boutique on Fashion Walk in May.
Hong Kong’s Kowloon island is also seeing an influx of new stores. Among the notable recent openings this year is Swiss watch and jewellery brand Piaget’s flagship location in Tsim Sha Tsui, designed by esteemed Shanghai-based architects Neri&Hu.
In late April, Van Cleef & Arpels opened a three-storey, 170-square-metre store on Canton Road, followed by another jeweller, De Beers, which unveiled a two-storey boutique in Harbour City.
Mall landlords are now seeing the other side of the equation, according to Jason Pollard, executive strategy director for retail, APAC at Landor & Fitch.
“They understand that driving brand equity through relevance and differentiation is as important for them as it is for their tenants. This requires an evolution in shopper-centric tenancy mix, accommodating the new post-Covid mindset of a mall as half- or full-day destination,” Pollard says.
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“Large store formats can be a great volume business for retailers and landlords alike, particularly when retailers recognise the brand experience opportunity of larger store formats,” Pollard adds. “This shift in channel preference creates a healthy pressure on physical stores to do what can’t be done online: drive equity through brand experience.”