How Should Luxury Brands Begin To Leave Hongkong?

From the Wall Street, Hongkong has the most expensive shopping street in the world, and some of the shops here have recently dropped 40% points, reflecting the impact of Hongkong's Luxury Retailing industry, which was once driven by China's booming economy.

From June to September, the number of visitors to Hong Kong is decreasing, the decrease is maintained between 4% and 7%, the economic environment is uncertain, the Hong Kong dollar is strong, the recent unpleasant incidents against mainland tourists, and the relaxation of visa measures by other countries are all reasons for the decline of mainland visitors.

From Prada to Gucci to Coach, many

The company is appealing to owners to cut down on expensive rents, and even some luxury brands have begun to pull out of their core commercial streets.

According to the financial times, Jaeger Le Coulter, a Swiss watch manufacturer in Tongluowan, has now become a local discount cosmetics shop, and the rent has dropped by 40% over the peak of 2012.

Another Swiss watchmaker, TAG Heuer, closed a shop in Tongluowan, Hongkong, in August. The company said the rent was too high.

Coach flagship store, which is located in the most prosperous area of central Hongkong, was replaced in September this year, instead of a relatively cheap sports brand Adidas.

It is reported that the rental of ADI's store is only 60% of the previous Coach, and it has also shrunk by as much as 40%.

According to the Beijing Youth Daily, the total area of the property located at 36 Queen's Road Central and 1 / 3 floor of Xingwei building, Hongkong, is 13000 square feet, or 1200 square meters.

In the summer of 2008, the Coach flagship store opened in Hongkong. At that time, the store was highly valued by Coach, trying to turn it into the largest Coach store in the world. The main reason is "tens of millions of Chinese tourists come every year."

Tourism. "

This store has also experienced great brilliance, which can be seen from its rent changes: when it was signed in 2008, the rent was HK $2 million 600 thousand per month and the lease was four years.

When the rent was renewed again in 2012, the rent rose to HK $5 million 600 thousand, plus the external wall advertising rent of HK $1 million 600 thousand, which amounted to HK $7 million 200 thousand, and the overall rent was nearly three times.

Even so, Coach renewed the contract for five years, which should expire in 2017.

Watches and jewellery sales, which measure the prosperity of Hongkong's luxury goods market, doubled in 2010~2013, reaching $15 billion a year, but declined gradually in the next two years. Sales in the first 8 months of this year fell by 14%.

Somebody pressed this.

Reckoning that, according to the monthly rent of HK $7 million 200 thousand, even if no material, labor costs and marketing costs are involved, the Coach central store needs to sell 50 handbags priced at HK $5000 per day, just to offset the rental cost. But in fact, the number of mainland visitors to Hong Kong has been greatly reduced recently, and the luxury stores are being crowded. The Coach store is faced with the situation that income is hard to resist rent, and finally it is closed.

Huang Zihua, managing director of Midland Holdings, the real estate agency, said that the retail rentals in the first tier core areas such as Tongluowan and central Hongkong had been driven by mainland customers annually to 20%-30%, increasing by 5 to 10 times in 10 years. Now mainland customers are left behind in Hongkong market, and the decline in retail rents has already fallen by 30%-50%.

"Today's backdrop is grim," said Simon Smith, head of Hongkong Research Department of Savills, Davies, a real estate agency. "Eventually people will spend less on large non essential consumer goods. The impact of watches and jewellery is once the biggest, but now the impact has spread to clothing and cosmetics."

Lian Zhihao Lin, executive director of retail services in Hongkong, CBRE, said that the overall retail market in Hongkong was different from before, but they still had to pay high rent. They had to find a way to maintain higher profits or to negotiate rent reduction with owners, or not to renew the lease when the lease expired.

Luxury brands are no longer in sight. The myth of Hongkong shops rent is "smashed", which is the true portrayal of Hongkong's retail industry.

These two obviously are related to the sharp decline of the number of mainland tourists to Hong Kong.

Lin Qinglin, director and Secretary of Hongkong Oriental watch office, said that sales of its stores fell 15% to 20% compared with the same period this year, and the outlook is not optimistic.

More people in the retail industry described this as "the worst Golden Week" in Hongkong.