About 40 international brands established their first store or first stand-alone store in Hong Kong in 2013, a new report released by Jones Lang LaSalle shows.
These include retailers in fashion & accessories, jewellery and watches, cosmetics, restaurants, skincare and even bookstore coming from America, Europe, Australia and Asia.
Some brands such as Oroton, Topshop, Intimissimi and Innisfree opened street flagship stores to build up their presence, whereas others like Desigual, Volcom and Victoria’s Secret and the re-entry of Michael Kors adopted a more cautious approach of setting up stores in shopping mall environments.
“Retailers indicate their continued confidence in Hong Kong by consistently investing in their existing stores and opening new flagships. While many neighbouring Asian cities are doing incredibly well in sales and profit margins, it is here in Hong Kong that the retailers find most comfort and confidence in housing their flagships,” said Tom Gaffney, Head of Retail at Jones Lang LaSalle Hong Kong.
The Retail Atelier report noted that confidence from these international brands toward Hong Kong’s retail market was supported by the strong underlying fundamentals of the market. Total retail sales in 2013 reached over HKD494 billion (USD63.6 billion), up 11 percent compared to the growth of 9.8 percent in 2012. Domestic consumption was supported by a healthy labour market, with the unemployment rate edging down to 3.2 percent, the lowest level since end-2012.
The Retail Atelier report also noted that the retail market received sustained support from the steady growth of the inbound tourism market.
Tourist arrivals in 2013 recorded 11.7 percent growth in 2013, slower than the 16 percent growth in 2012. The growth in Mainland Chinese tourist arrivals continued to slow – 11.1 percent year on year in the fourth quarter of 2013. However, the market was boosted by the increase spending power by Chinese visitors.
According to the Hong Kong Tourism Board’s latest visitor spending report, per head spending by Chinese visitors on shopping increased by 7.5 percent you to HKD4,246 (USD547.1) in the first half of 2013. In particular, per head spending from same-day Chinese visitors, who typically spend approximately HKD2,500 (USD322.1) per visit, increased 10.6 percent you, compared to overnight Chinese visitors, which grew only 8.5 percent you.
“Looking ahead, we believe international retailers will continue to choose Hong Kong to house their flagships, given the steady market growth driven by strong demand,” Gaffney said. “However, the retail sales in 2014 may post a slower growth due to some potential headwinds, including weaker private domestic consumption caused by a sharp correction in the city’s residential property market, as well as a possible slowdown in mainland visitor arrivals partly because of a temporary freeze on the number of pilot cities for the IVS Scheme."