Hongkong Pfer To Local Customers To Start Upgrading Retail Market

The cooling of high-end consumer market and the sharp decline of mainland tourists are changing the retail structure of Hongkong, which is dominated by high-end brands.

The latest special report of CB Richard Ellis: the change of retail pattern: how to survive in Hongkong retail slowdown? The research results show that mid-range retail brands will replace luxury brands and dominate Hongkong's future retail market demand.

Over the past ten years, the share of tourist consumption in Hongkong's total retail sales has increased from 20% in 2004 to 42% in 2015, mainly due to the strong growth in sales volume of tourist oriented products.

Apart from the increase in the number of shops, the average store area of some retailers has also expanded.

Since 2014, the number of visitors to the mainland has declined, and the consumption pattern of tourists has also changed from luxury to mid-range brand consumption.

Although Hongkong's local retail consumption demand remains strong, it is often ignored by the retail market.

The annual average growth rate of local private consumption expenditure is 4.9% in 2004-2014 years, while the median annual growth rate of household income in the same period is 4%.

Local consumption will remain stable in the short and medium term. Short term fluctuations in the stock market and market expectations of interest rate increases will only have a slight impact on local consumption.

CB Richard Ellis predicts that 70% of the new supply will come from the next five years.

A total of 5 million 600 thousand square feet of retail space will be used as a shopping area around the home. This will provide opportunities for middle class retailers to expand shop opportunities for middle class families.

According to official statistics, the average household income of these local shopping malls is higher than the median.

The retail industry has performed well in the past 2003-2014 years, of which high-end products are thriving.

The average rent of front-line shops in Tongluowan, Tsim Sha Tsui, Mong Kok and central was increased by 213% during that period.

However, since the beginning of last year, the growth momentum of the luxury retail market has been affected by a series of factors, which has a negative impact on tourism and retail sales in Hongkong. However, there are still many opportunities for retailers in the middle market.

Lian Zhihao, executive director of Hongkong Commercial Services Department, CSB, pointed out that the retail industry is undergoing structural pformation.

Over the past ten years, the owners of the first street shops have benefited from the strong demand and large rents of luxury retailers, but at present, luxury brands are seeking to adjust their leasing strategies to save costs, while the mid-range brands also expect to enter the gold lots at the appropriate rent level. The owners have to face the reality of environmental change when negotiating the terms of the lease.

This situation is

Provide opportunities for expansion.

In order to cope with the slowdown in sales, luxury retailers are gradually integrating the branch network to free up some non main stores to increase the market supply of shops.

Some high-end fashion, cosmetics, clocks and jewelers choose not to renew or withdraw ahead of the lease. However, some merchants will still try to retain flagship stores in key areas, mainly considering that these shops are often located in gold blocks and are more attractive to customers and have greater market value.