Will Chinese Luxury Consumers Abandon Hongkong If They Change Their Shopping Habits?

According to the world clothing shoes and hats net, in the past few years,

The market as a whole is in a state of depression. As a world-famous shopping shrine, Hongkong has also been seriously affected.

Today, the retail industry in Hongkong is gradually changing.

Changes in Chinese consumers

Chinese consumers have become more accustomed to buying luxury goods on the mainland or online, and are more sensitive to prices.

This is a luxury for the world.

This has caused a great impact and is more serious for Hongkong's bustling business district.

As the largest source of tourists in Hongkong, tourists from mainland China are turning to other regions such as Europe and Japan. The number of tourists to Hongkong is gradually decreasing.

At the same time, Chinese tourists are

Investment is also decreasing.

According to Oliver Wyman, a consultancy, in 2016, the proportion of Chinese tourists spending overseas for shopping decreased by 17%, but the proportion of entertainment for entertainment increased.

Above: a sketch of the various expenditure ratios of Chinese tourists

The decline of tourist consumption has a serious impact on the luxury market in Hongkong.

In August, luxury goods sales in Hongkong were only 1/3 of the peak in April 2013.

In the downturn of luxury goods market, the performance of major real estate developers in Hongkong has been plunged into a trough, and forced to make adjustments to enhance their competitiveness.

Forced adjustment of real estate developers

In the past 18 months, the number of restaurant brands in Tai Koo square has doubled as the owner of Tai Koo Plaza, the famous shopping mall in Hongkong.

A large proportion of the new 30 brands in Tai Koo square are brands such as hairdressing and catering, which can not be fully operated through online channels.

The owners of Harbour City, Kowloon warehouse group limited and Shen Shen Industrial Co., Ltd. have adopted similar strategies to introduce more fashionable lifestyles and catering brands.

Nevertheless, the sales performance of catering and fashion brands can not compensate for the loss of luxury brands.

In addition, in order to attract new brands, real estate developers must give more attractive leasing policies, which also has a great impact on their overall performance.

In the first half of 2017, the retail revenue of Tai Koo real estate limited decreased by 0.2% compared with the same period in 2017, while the retail sales of another Real Estate Company Shin Shen Industrial Co., Ltd. fell by 0.1%.

As Harbour City's dependence on luxury goods sales is low, the performance of the Kowloon warehouse group is slightly better than that of its peers, and sales increased by 3% over the same period last year.

These adjustments are not without any side effects.

Patrick Wong, an analyst at Bloomberg Intelligence, said that if the number of future tourists began to pick up and the luxury industry turned warm, the Real Estate Company in Hongkong would probably not be able to grasp the opportunity for the overall growth trend.

Having said that, if the real estate developers do not take any measures, the situation will only get worse.

Fiona Shiu, general manager of Pacific Plaza, said: "the adjustment of our business policy has enhanced our competitiveness.

Although the overall retail environment is not ideal, we have achieved sales growth since the middle of 2016, and passenger traffic has begun to pick up. "

Luxury will not give up Hongkong.

Although the major luxury brands have begun to reduce the size of the retail network in Hongkong, brands like Burberry and LVMH have only reduced the size of stores in Tai Koo square.

Although Coach has closed its stores in Tai Koo square, they also said they would refurbish other stores in Hongkong and would not quit Hongkong.

"Luxury brands can't give up Hongkong, they will only close some stores.

"Hongkong has always been very resistant to bad economic conditions, but it is unlikely that they will return to the sales peak of 2013," said Nicholas Bradstreet, general manager of Savills Plc, a research firm.

The Swiss watch brand Audemars Piguet Holding SA (Audemars Pigeut watch)'s CEO Francois-Henry Bennahmias also agrees with this.

He said that by the end of this year, the number of stores in Hongkong would be reduced from 16 in early 2016 to 8.

Bennahmias said: "the richest people in the world will not go shopping. Stores should take the initiative to find them.

In the past twenty years, the business model of luxury goods has not worked.

In the next few years, we will see large-scale reforms.

"

When it comes to the relationship between luxury brands and Real Estate Company, he says, "if the real estate developers are too much pressure on us, we will choose to leave.

The financial concession of any brand is limited.

If the conditions they give us are unacceptable, we can only choose to leave or open up other business models. "

Hongkong is not the only Asian city affected by this change.

In the past ten years, the proportion of catering brands in Singapore shopping centers has doubled to 40%, according to Desmond Sim, director of Southeast Asian Research at CBRE, a real estate service company.

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