Fashion
After a decade of aggressive store expansion, Hong Kong’s jewellery retailers have been hardest hit by the recent downturn in tourism, with half their revenue coming from mainland shoppers.
Jewellers have now been forced to a adopt variety of strategies to tackle the tougher market, ranging from trying to lure local customers, cutting store sizes and expanding business overseas.
TSL, one of Hong Kong’s largest jewellery chains, is scaling back its presence in tourist districts while setting up more small shops in local malls.
Estella Ng Yi-kum, deputy chairman and chief strategy officer at TSL, said the rent for one store in a prime area could pay for at least two stores of the same size in a residential area.
“Moving into residential areas enables us to provide better customer service,” said Ng, adding that growth in local stores is “much more stable”.
After the closure of its flagship Causeway Bay store earlier this year, TSL has opened three smaller stores in Temple Mall North in Wong Tai Sin, Plaza Hollywood at Diamond Hill and Olympian City in Kowloon.
Luk Fook, the city’s second largest jeweller, is maintaining its presence in prime retail areas, in the hope that the mainland tourists will return, while cutting the size of some stores or relocating them to secondary locations.
Earlier this year, Luk Fook closed a store on Nathan Road, which had cost HK$2 million a month to rent. Meanwhile it opened a smaller store on the same street with the rent as low as HK$400,000.
“The turnovers were almost the same,” said Luk Fook chairman and chief executive William Wong Wai-sheung, adding the smaller store was enough to cater for the shrinking number of mainland tourists.
Following the logic that mainlanders have to spend their money somewhere, Chow Tai Fook, the city’s largest jeweller, has moved into both the mainland and South Korea, another emerging tourist mecca.
It recently opened a new store in Qianhai free-trade zone in Shenzhen, offering competitive prices just slightly higher than Hong Kong. The jeweller’s mainland business contributed 56 per cent of its total revenue in the six months to September 30 this year, according to company figures.
International jewellery brands seem to be adopting the opposite strategy, switching their existing stores to prime locations, according to a retail leasing expert.
Joe Lin, executive director of retail services at leasing firm CBRE, said many international brands had rented stores with either better quality in terms of customer traffic and visibility, or lower rents in Causeway Bay.
“This is a great timing” said Lin, adding that more prime store locations had become available amid the retail downturn.
This article appeared in the South China Morning Post print edition as Jewellers forced to adapt as city loses its tourist lustre
