Hong Kong may no longer be the darling of European luxury brands after the combined effect of a slower local economy and fewer mainland shoppers, but the city is still a magnet for less expensive luxury brands and mid-priced retailers.
Retail sales have seen an 18 month-long nosedive, with August figures (the latest available) down 10.5 per cent year on year to HK$33.9 billion.
The decline, largely due to a drop in the number of mainland Chinese tourists, has forced landlords to reduce retail rents to avoid vacancies.
Some less expensive luxury brands and mid-priced retailers still have confidence in the Hong Kong retail market, taking the opportunity to move in on prime locations as high end luxury brands close up shop, according to property consultants.
French brand Sandro is an example. It finds Hong Kong is still a highly lucrative market compared with the rest of the world – even in bad economic times.
Branding its products as “accessible luxuries”, Sandro’s chief executive Jean-Philippe Hecquet said the segment became “very powerful” when people started to look inside their wallets.
The luxury retail industry veteran, who previously worked for world’s biggest luxury group LVMH for over a decade, told the Post that upper-middle class consumers still want to enjoy their life even with less money.
Sandro, along with sister brand Maje and Claudie Pierlot, recorded a 51 per cent year on year growth in Asia Pacific in the first six months of the year.
Encouraged by the strong performance, Sandro opened three new stores in prime shopping districts in Hong Kong, and plans to add two or three more by the end of next year. It currently operates eight outlets in Hong Kong.
However, Hecquet admits Sandro may have missed the “golden age” when rich mainland shoppers queued up outside Chanel, Gucci and Louis Vuitton outlets, snapping up expensive leather bags emblazoned with big logos.
But he noted that the emerging young upper-middle class in Asia would be the future powerhouse for luxury goods, and the right time to expand is now.
(Source: South China Morning Post)