Luxury Is Sluggish! Luxury Stores In Hongkong Are Spreading To The Mainland.

As early as last year, HSBC analyst Erwan Rambourg predicted that in the hearts of mainland consumers, Hongkong is losing its status as a luxury center. Hongkong will face a series of challenges in the next few years.

Closure of stores.

And luxury

The latest quarterly earnings data show that this prediction is not necessarily alarmist.

Tigheuya, Coach and Belle have been closed. Zhou Dafu [micro-blog] intends to close 4 stores this year. The signing of the rent and rent reduction agreement by the king watches and jewellery has already opened up the store outlet for luxury brands in the second half of the year.

The continuous high rent or the direct cause of the closing of shops.

According to data from commercial real estate services, the retail rents in Tongluowan, Hongkong, in the first quarter of 2014 amounted to HK $43310 per square meter, which is nearly 3 times the rent in the core area of Paris.

The high rent resulted in a failure to negotiate with the owners and eventually decided to close the store.

The central flagship store closed by Coach is HK $7 million 200 thousand per month, and the early withdrawal of the property has saved HK $180 million.

At present, many Hongkong owners have to face the pressure of reducing rent.

In addition, more mainland tourists empathize with shopping destinations such as Europe, America, Japan and Korea, which also make Hongkong lose its attractiveness to the mainland's high purchasing power.

Retail sales of Harbour City, the largest shopping centre in Hong Kong, had fallen by 7.1% to HK $15 billion 600 million as of the end of June this year. The consumption trend of Hongkong's overall retail market is not difficult to see.

Tariff adjustment and changes in consumption structure may be the last straw in the Hongkong market.

In June 1st this year, the mainland lowered the tariffs on some imports. According to the retail sales results released by the Hongkong statistical department, sales of luxury goods declined, but sales of low and medium priced goods increased instead. Sales of food, alcoholic drinks and tobacco increased by 7% in July compared with the same period last year, and goods in supermarkets increased by 0.4%.

This shows that the consumption structure of tourists has changed. They mainly purchase daily necessities.

The impact of such a shift on Hongkong shops has already appeared, and the activity of rental activities in the core area has declined, and the rental of the shops has dropped.

{page_break}

Closing shop tides may spread to the mainland

Bain's 2014 China luxury goods released earlier this year

"In 2014, China's luxury market showed a negative growth for the first time, down 1% from 2013," it said.

In 2014, luxury stores also closed the most stores, of which HugoBoss closed 7 stores, Ferragao and Zegna closed 6, and Burberry closed 4.

Slower growth in Greater China has led some luxury brands to continue to reduce or slow down their stores in 2015.

Data show that the number of Prada stores in the first quarter of this year was 33, compared with 49 in 2014, while the number of Amarni stores decreased by 5, and the number of Chanel stores was 11, which was half of the largest store period.

Bruno LAN, Bain's global partner, has predicted that luxury brands will continue to adjust their distribution in 2015, including closing discount stores and authorized stores.

In 2015, the luxury brands in the Greater China region were not very good. It is not hard to speculate that the tide of shop closing is likely to spread to the mainland.