Hong Kong's luxury retail sector is undergoing a transformation as the city adjusts to a decrease in high-spending Chinese tourists and a shift in consumer preferences. Once a global hub for multi-brand department stores and ultra-luxury brands, the city is now facing challenges from competing shopping destinations, changing consumer behaviour, and the rise of online shopping, impacting the demand for luxury goods in the region.<o:p></o:p>

Shift in Visitor Focus: From shopping to experience<o:p></o:p>

Before the pandemic, Hong Kong attracted high-spending mainland Chinese visitors, boosting its luxury retail sector. However, the focus of visitors has now shifted from extravagant shopping sprees to a greater desire for local culture and experience-based tourism, according to Rosanna Tang, an executive director at Cushman &amp; Wakefield. Overnight and same-day visitor shopping spend has significantly decreased, prompting retailers to redirect their focus towards food and beverage outlets.<o:p></o:p>

"The focus of visitors in Hong Kong has shifted from 'shop till you drop' to a greater desire for local culture and experience-based touring ," Reuters quoted Tang as saying.<o:p></o:p>

Impact on Luxury Retailers: Harvey Nichols closes flagship store<o:p></o:p>

British luxury department store Harvey Nichols, a symbol of Hong Kong's luxury retail scene, is at the forefront of these changes. Its owner, Dickson Concepts, recently announced the relinquishment of its lease on the flagship five-level store in the upscale Landmark mall after almost two decades. The company stated, "Chinese tourists coming to Hong Kong are no longer focused on shopping as they used to be before the pandemic."<o:p></o:p>

Luxury retailers, including Valentino, Burberry, and LVMH's Tiffany, have also closed some of their stores in Hong Kong, where retail rents remain the highest in Asia despite a 40 per cent drop since 2019.<o:p></o:p>

Government and Tourism Sector Response: A shift towards nature and leisure attractions<o:p></o:p>

With total retail sales down about 20 per cent from 2018 levels, the government and tourism sector in Hong Kong are making efforts to reduce reliance on luxury spending by Chinese shoppers. Initiatives include promoting nature and leisure attractions, developing large-scale festivals, and green tourism projects in outlying islands. However, the effectiveness of these strategies remains uncertain as the city grapples with the aftermath of anti-government protests in 2019 and strict COVID-19 rules.<o:p></o:p>

Luxury sector's repositioning and future prospects<o:p></o:p>

Despite closures and challenges, Hong Kong has reclaimed its position as the number one location in per-capita spending on luxury goods in 2023, surpassing Switzerland and Singapore, according to Euromonitor International. The city is expected to recover to its pre-COVID personal luxury goods sales levels by mid-2024.<o:p></o:p>

Caroline Reyl, Head of Premium Brands at Pictet Asset Management, anticipates improvement in the luxury sector but acknowledges the competition from China's Hainan island. She mentions, "There was probably some over-distribution in the past," suggesting that major luxury labels saturated Hong Kong with their stores. As some brands reduce exposure to Hong Kong, opportunities emerge for others to fill the void.<o:p></o:p>

Luxury brands such as Louis Vuitton and Chanel remain optimistic about Hong Kong's future prospects. Louis Vuitton recently held a star-studded fashion show in the city, signalling a luxury renaissance. Chanel and other brands have opened new retail spaces, demonstrating confidence in the city's resilience despite current challenges.<o:p></o:p>

While property developer Hong Kong Land reports a return to pre-pandemic levels in tenant sales and footfall in its city centre malls, the closure of Harvey Nichols highlights the changing dynamics in the luxury retail landscape.<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

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Hong Kong's luxury retail sector is undergoing a transformation as the city adjusts to a decrease in high-spending Chinese tourists and a shift in consumer preferences.

Hong Kong's luxury retail sector is undergoing a transformation as the city adjusts to a decrease in high-spending Chinese tourists and a shift in consumer preferences. Once a global hub for multi-brand department stores and ultra-luxury brands, the city is now facing challenges from competing shopping destinations, changing consumer behaviour, and the rise of online shopping, impacting the demand for luxury goods in the region. Shift in Visitor Focus: From shopping to experience Before the pandemic, Hong Kong attracted high-spending mainland Chinese visitors, boosting its luxury retail sector. However, the focus of visitors has now shifted from extravagant shopping sprees to a greater desire for local culture and experience-based tourism, according to Rosanna Tang, an executive director at Cushman & Wakefield. Overnight and same-day visitor shopping spend has significantly decreased, prompting retailers to redirect their focus towards food and beverage outlets. "The focus of visitors in Hong Kong has shifted from 'shop till you drop' to a greater desire for local culture and experience-based touring ," Reuters quoted Tang as saying. Impact on Luxury Retailers: Harvey Nichols closes flagship store British luxury department store Harvey Nichols, a symbol of Hong Kong's luxury retail scene, is at the forefront of these changes. Its owner, Dickson Concepts, recently announced the relinquishment of its lease on the flagship five-level store in the upscale Landmark mall after almost two decades. The company stated, "Chinese tourists coming to Hong Kong are no longer focused on shopping as they used to be before the pandemic." Luxury retailers, including Valentino, Burberry, and LVMH's Tiffany, have also closed some of their stores in Hong Kong, where retail rents remain the highest in Asia despite a 40 per cent drop since 2019. Government and Tourism Sector Response: A shift towards nature and leisure attractions With total retail sales down about 20 per cent from 2018 levels, the government and tourism sector in Hong Kong are making efforts to reduce reliance on luxury spending by Chinese shoppers. Initiatives include promoting nature and leisure attractions, developing large-scale festivals, and green tourism projects in outlying islands. However, the effectiveness of these strategies remains uncertain as the city grapples with the aftermath of anti-government protests in 2019 and strict COVID-19 rules. Luxury sector's repositioning and future prospects Despite closures and challenges, Hong Kong has reclaimed its position as the number one location in per-capita spending on luxury goods in 2023, surpassing Switzerland and Singapore, according to Euromonitor International. The city is expected to recover to its pre-COVID personal luxury goods sales levels by mid-2024. Caroline Reyl, Head of Premium Brands at Pictet Asset Management, anticipates improvement in the luxury sector but acknowledges the competition from China's Hainan island. She mentions, "There was probably some over-distribution in the past," suggesting that major luxury labels saturated Hong Kong with their stores. As some brands reduce exposure to Hong Kong, opportunities emerge for others to fill the void. Luxury brands such as Louis Vuitton and Chanel remain optimistic about Hong Kong's future prospects. Louis Vuitton recently held a star-studded fashion show in the city, signalling a luxury renaissance. Chanel and other brands have opened new retail spaces, demonstrating confidence in the city's resilience despite current challenges. While property developer Hong Kong Land reports a return to pre-pandemic levels in tenant sales and footfall in its city centre malls, the closure of Harvey Nichols highlights the changing dynamics in the luxury retail landscape. (With inputs from Reuters) WATCH WION LIVE HERE

Hong Kong luxury retailers adapt as Chinese tourist spending declines

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Hong Kong luxury retailers adapt as Chinese tourist spending declines