Hong Kongers often say that the main attractions in this densely packed city are eating and shopping. But lately, it seems the focus has been more on shopping.
So far, 2013 is shaping up to be a busy year for Hong Kong retail, with openings every month. Over the past few weeks, Lanvin opened a flagship in the Central district, 3.1 Phillip Lim moved into a store at the IFC mall in Central and Uniqlo opened a 37,500-square-foot space in Causeway Bay. Coming up shortly, Topshop, in cooperation with Lane Crawford, will open a store on Queen’s Road Central.
As the gateway to China, Hong Kong has long been attractive to retailers.
“Hong Kong contributes significantly in building awareness and aspiration to China consumers,” said Ong Bee Cho, director at market research firm Ipsos in Hong Kong.
The city is a favorite overseas shopping destination for Mainland Chinese, who flock there for lower prices and better quality assurance. Luxury brands use the opportunity to introduce themselves to shoppers.
Brands often test out their reception in Hong Kong before delving into the Mainland market. “For many product categories and services, Chinese consumers see Hong Kong as the trend leader,” Ong explained. Though the Hong Kong-as-a-trend-leader image has diminished more recently with the rise of Shanghai and local Chinese designers, the vast majority of young Chinese “still look toward Hong Kong for lifestyle and fashion pointers,” Ong continued.
Mainlanders are an integral part of Hong Kong’s shopping landscape. Chinese shoppers are easily identified by their rolling suitcases, which they carry with them throughout the city from shop to shop. The dominant language in luxury shops these days is not Cantonese, the language of Hong Kong, but Mandarin. The growing influence of Chinese visitors has stoked some disgruntlement as Chinese demand for luxury goods has transformed the city — driving up rents and pushing out local mom-and-pop stores.
High demand and limited space has pushed Hong Kong’s retail rents to some of the highest in the world, up by 14.5 percent across the board last year, said Tom Gaffney, head of retail for Hong Kong at real estate agency Jones Lang LaSalle. In a prime district like Queen’s Road in Central, rents are now about 1,000 to 2,000 Hong Kong dollars, or $128 to $257 a square foot, monthly — or $1,536 to $3,084 a square foot yearly.
With rents as high as they are, brands are looking for alternative locations, depending somewhat on their target audience. More mainstream brands such as Marc by Marc Jacobs, Tommy Hilfiger, Coach, Victoria’s Secret and others have opened stores in Shatin, near the Chinese border, to target Mainland Chinese shoppers. Others are looking to some of Hong Kong’s more up-and-coming neighborhoods, such as Sheung Wan, west of Central, or Wanchai.
High rents are perhaps the biggest challenge for retailers in Hong Kong. Landlords are known to double rents if the opportunity arises. Shanghai Tang was forced to move its flagship from a historic building on Pedder Street after Abercrombie & Fitch reportedly agreed to pay double what Shanghai Tang was paying. Similarly, Forever 21 displaced Hong Kong-based apparel retailer Giordano for a prime 51,000-square-foot location in Causeway Bay, agreeing to pay 11 million Hong Kong dollars, or $1.4 million, a month ($16.8 million a year), which is about $330 a square foot annually. CBRE expects rents to be more “mild” this year, rising 8 percent.
Population: 7.17 million Population change: +0.9 percent (up by 61,500) since 2011; +6 percent (up by 423,600) since 2008 Population projection: Maintaining average growth of 1 percent a year over next five years Per-capita income: 248,400 Hong Kong dollars, or $32,004, annually Disposable income: 231,299 Hong Kong dollars, or $29,820, per capita (2012) Key industries: Financial services, trading and logistics, tourism, professional and producer services Fast-growing neighborhoods: Wanchai and Central and Western districts have the highest monthly median incomes at 33,000 and 32,000 Hong Kong dollars, or $4,252 or $4,123, respectively. Number of prime malls: 18 in Central, Causeway Bay and Tsim Sha Tsui Mall developments: Midtown Soundwill Plaza will open 216,000 square feet of additional retail space in Causeway Bay in the third quarter this year. Jones Lang LaSalle estimates an additional 5 million square feet of retail space between now and 2016, but not in any single major development.
HOT SPOT: WANCHAI
For brands targeting local Hong Kong or expatriate Western shoppers, Wanchai, a former red-light district located between Causeway Bay and Central, is becoming increasingly appealing. Now populated by boutique shops, quaint cafés and bars and high-end restaurants, the district is home to Club Monaco’s first men’s stand-alone store and a Tommy Bahama boutique.
“It’s an emerging district and evolving very quickly. Given population growth and also things like average household income, Wanchai is extremely high, so it makes sense for brands to be there,” said Tom Gaffney, head of retail for Hong Kong at real estate agency Jones Lang LaSalle.
Rents in Wanchai are a fraction of what they are in Central, or about 100 to 200 Hong Kong dollars, or $13 to $26 a square foot per month ($156 to $312 a square foot per year), but there are caveats: store sizes are smaller at about 500 to 2,500 square feet, and foot traffic is about a 10th of what is it is in the busier retail districts.
The customer demographic is different as well — Mainland Chinese visitors make up about 10 percent of sales, compared with 30 to 75 percent in Causeway Bay, Central or Tsim Sha Tsui, according to Jones Lang LaSalle.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty