- Don-Alvin Adegeest |
The Hong Kong protests have come with insurmountable costs for luxury brands, as stores remain shut, tourists stay away and shoppers avoid malls in protest areas.
Hong Kong, up until August, was a thriving metropolis for luxury brands, especially the lucrative flow of visitors from mainland China. The city accounts for between 5 and 10 percent of the estimated 285 billion dollars of annual global sales of luxury goods, according to Bernstein analysts.
But as Hong Kong asserts its independence, protesters are concerned about issues other than shopping. As the demonstrations continue, the escalating turmoil has hit tourism and retail spending hard, hurting global brands and retailers that have come to rely on the financial hub as one of the world’s luxury shopping destinations.
As was reported on Thursday, the protests could cost Burberry 100 million pounds in local sales. According to Quarzy, investment firm UBS has estimated that Richemont gets about 11 percent of its sales from Hong Kong, and Swatch about 10 percent. Hermès, Moncler, Prada, and others also count on the city for a significant piece of their sales.
Reuters reported last week that many brands could see a fall between 30 and 60 percent in Q3. .
The South Morning China Post wrote retail sales fell more than expected over the summer and storekeepers said tourist numbers dropped as much as 50 per cent in July.
Golden Week, a key holiday period on the retail calendar, which sees a surge of Chinese tourists travel and shop abroad, saw record Chinese tourists visit London from 1st to 7 October. Jing Daily reports this Golden Week could be one of the grimmest in recent memory for major brands as shoppers avoid Hong Kong. Hong Kong International Airport expects 2 million fewer visitor arrivals this year and the city saw a 90 percent drop in mainland Chinese group tours in September in comparison to last year.
Article sources: Quartzy, Jing Daily, SCMP