Luxury retailers in Hong Kong are adapting to changes as spending from Chinese tourists declines. Once a major hub for high-end stores, the city is now facing challenges from other shopping destinations, shifts in consumer behavior, and the rise of online shopping, impacting the demand for luxury goods.
The focus of visitors has shifted from extensive shopping to a greater interest in local culture and experience-based tourism. High-spending Chinese tourists, once boosting Hong Kong’s luxury retail sector, are now showing a preference for experiences over extravagant shopping sprees.
This shift has had notable impacts, with Harvey Nichols, a renowned British luxury department store, deciding to close its flagship store in the upscale Landmark mall after almost two decades. Other luxury retailers like Valentino, Burberry, and LVMH’s Tiffany have also closed some of their stores in Hong Kong, where retail rents remain high despite a 40% drop since 2019.
To counter the decline in luxury spending, the government and tourism sector are promoting nature and leisure attractions, developing festivals, and green tourism projects. However, the effectiveness of these strategies remains uncertain due to the aftermath of anti-government protests in 2019 and strict COVID-19 rules.
Despite closures and challenges, Hong Kong has regained its position as the top location for per-capita spending on luxury goods in 2023, surpassing Switzerland and Singapore. The city is expected to recover to pre-COVID luxury goods sales levels by mid-2024.
Luxury brands like Louis Vuitton and Chanel express optimism about Hong Kong’s future, holding events and opening new retail spaces. While some brands reduce their presence in Hong Kong, others see opportunities to fill the void. The closure of Harvey Nichols signals changing dynamics in the luxury retail landscape, even as some reports indicate a return to pre-pandemic levels in tenant sales and footfall in certain city center malls.
