PARIS/MILAN: Luxury brands are likely to retreat from Hong Kong as the city is wracked by protests at a time when wealthy Chinese shoppers are staying on the mainland, consultancy Bain said on Thursday, highlighting a shift that is reshaping the global industry.
The Hong Kong pro-democracy protests weighed on third-quarter sales growth at firms from Cartier owner Richemont to Germany's Hugo Boss , as the flow of visitors dwindled and retailers closed shop temporarily. "Local customers cannot sustain the 1,000 stores in the mid-term," said Federica Levato, a partner at Bain in Milan.Luxury sales in Hong Kong, which hit a peak of 10 billion euros in 2013, are likely to drop to 6 billion in 2019, Bain said. This would mean the city that once accounted for around 5per cent of global sales is now closer to 2per cent.
Despite China's economic slowdown, shoppers are continuing to spend heavily on luxury - but they are increasingly staying at home because of a weaker yuan currency that has blunted their overseas firepower. Meanwhile Beijing has cut import duties and sales tax, eroding the competitive price advantage of foreign destinations like Hong Kong, London and New York.
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