With the closure of Joyce’s central flagship store, what is the future of retail in Hong Kong?
The flagship store of Hong Kong-based luxury retailer Joyce’s Central has always been a go-to fashion destination thanks to its selection of cutting-edge brands and legendary window displays. Earlier this month, however, passers-by were surprised when they were greeted by a nostalgic display, aptly titled ‘Finale’, announcing the closure of one of the city’s best-loved fashion boutiques. .
Store closures have become all too common in Hong Kong since political unrest in 2019, followed by the COVID-19 pandemic in 2020. Like other major cities around the world, brands and retailers have been forced to close shop in due to continued closures.
More than two years later, the West and other parts of Asia are beginning to show signs of recovery, while Hong Kong’s retail market is still reeling from shock waves due to continued border closures. and uncertainty surrounding local government pandemic policies.
In the past few months alone, brands like Burberry, Valentino, Tiffany & Co. and Coach have closed stores in what was once considered a prime retail space in the city.
According to experts, however, the future is not all bleak.
“Yes, the luxury market as a whole hasn’t been doing well since COVID, but some brands are still on the rise in Hong Kong,” says Oliver Tong, head of retail at real estate giant Jones Lang LaSalle Hong Kong and Macau.
“It really is a mixed bag. While many luxury brands have consolidated their local distribution networks, others have also expanded or opened new flagship stores. It depends on the brand itself and how it resonates with the local customer,” he explains.
Popular luxury brands like Hermès and Dior are among the few elites who have recently seized the opportunity to invest in larger flagship stores on Canton Road in Tsim Sha Tsui, which in its heyday was a magnet for shoppers. Chinese tourists. In a recent interview, Dior chief executive and chairman Pietro Beccari said the new flagship, which is due to open later this month, showed the brand’s commitment to its “loyal clientele” and was “optimistic” about in the future of the city.
“Luxury brands are always actively looking for opportunities [in Hong Kong] but need certainty from the government before they can make concrete decisions. They are also aware that what has worked in the past may not work in the future, so they need to add some magic to the experience.
“In recent months, we have seen brands give up the idea of opening permanent spaces in favor of large-scale pop-up stores in neighborhoods where they are not present. This allows them to target new customers and sell different items,” says Tong.
Looking ahead, there are different challenges, especially if Hong Kong wants to retain its status as a leading trading center in Asia. Even before the pandemic, the city was experiencing fierce competition from other Asian markets, including mainland China, Thailand and Korea. Tong says the city’s low adoption of online shopping – online shopping accounts for around 26% of total retail purchases in China compared to 8% in Hong Kong – has also put additional pressure on retailers and brands. so that they think outside the box and create more unique shopping experiences for customers.
“Low rents can be very attractive as they create a level playing field not only for big brands but also for local retailers. More vacant space means it is easier to develop and explore new concepts such as retail dining and entertainment to keep local customer engagement and spending going,” Tong said.
Interestingly, many local fashion groups and retailers, including lifestyle boutique Kapok and Rue Madame Fashion Group (which operates popular brands like Sweaty Betty and Whistles) have jumped to open new stores in key locations while expanding their brand offerings. With rents in prime locations at their lowest since 2003 – Tong estimates high street rents have fallen around 75-80% from their peak – landlords as well as independent brands and retailers should look to carve out a place.
“It’s great to have more diversity, but the key is for landlords to keep rents reasonable so the shopping landscape can continue to be interesting even when the borders open. This will make Hong Kong more attractive to tourists. because there is a clear differentiation between us and China, and the rest of the world,” says Ariane Zagury, founder of Rue Madame Fashion Group.