Winds of change blow away HK luxury stores
FROM fast fashion chain H&M to lifestyle brand Maison Kitsune and cosmetics firm Innisfree, mass-market retailers are setting up shop in premises once occupied by luxury brands in Hong Kong.
Aided by falling rents in top locations, accessory, sport and lifestyle retailers are emerging as a new driving force of Hong Kong's US$60 billion (S$80.5 billion) retail industry.
Said Joe Lin, executive director at property consultant CBRE: "We are going to see more mass-market brands reappear in prime locations."
Weak sales of luxury goods drove Hong Kong to report a 15th straight monthly drop in retail sales, and the city was set to post another dip yesterday when it released June data.
Luxury retail in Hong Kong exploded over the past decade as increasingly wealthy mainland Chinese flocked to the city.
Said Cynthia Ng, director of retail services of Colliers International: "They (new retailers) are not necessarily local brands but tend to be cheaper in pricing and younger."
Still, mass-market brands might struggle to achieve the margins and profitability needed to justify prime rents in a weak retail environment, said Kevin Lai, an economist at Daiwa Capital Markets.
Retail rents in Hong Kong's core shopping districts are likely to fall another 5 per cent to 8 per cent in the second half of this year, bringing the full-year correction to 10 per cent to 15 per cent, according to CBRE.
Those declines are attracting new tenants. On Russell Street, the 400 sq ft space jewellery group Folli Follie occupied has been replaced by footwear outlet Joy & Mario.
Swatch Group's Jaquet Droz luxury watch shop has gone to South Korean cosmetics brand Innisfree.
Nearby, H&M opened a flagship store last year.
Sports brand adidas last year leased a 13,000 sq ft shop for 22 per cent less than its former occupier, Coach.
Swire Properties' Pacific Place, where British fashion house Burberry will halve the size of its store by next year, is reshuffling its tenant mix, bringing in more food and beverage outlets.