Cashed-up Asian shoppers are switching their retail allegiances from long-time favorites Hong Kong and Singapore, and it’s not just for a change of scenery.
Japan, South Korea and Taiwan are the new regional hotspots for selective shoppers, experts say, because they offer a mix of attractive exchange rates and must-have products.
The Americas and Europe are still the world’s two largest luxury hubs, with 34 and 33 percent of the market respectively, according to the Altagamma 2015 Worldwide Markets Monitor report by Bain & Company. The report calculates market-share based on the value of the luxury goods purchased.
Asia holds 28 per cent of the global personal luxury goods market, but the regional distribution is changing.
“Hong Kong, mainland China and Macau have taken a hit, losing spend to Japan and Europe,” Joel Stephen, senior director and head of retailer representation for Asia at commercial real-estate player CBRE, said, adding that China’s corruption crackdown had also hurt the level of spending.
“Singapore and Taiwan have also seen a drop in mainland Chinese luxury spend. There is still tourism, but a lot of the HNWI’s [high net worth individuals] from mainland China are traveling further afield.”
While still largely driven by local shoppers, Taipei’s retail sector got a boost when the government eased visa restrictions and brought in a more consumer-friendly tax system. High-end department stores such as The Breeze Centre in the Taipei 101 area are an example of the stores capitalizing on the trend.
Shoppers are also taking advantage of the weak yen, which is giving them greater purchasing power in Japan.
“Chinese and, to a certain extent, Singaporean shoppers prefer to buy luxury goods when travelling where there are more opportunities to purchase them at lower prices,” said Amrita Banta, managing director at luxury-focused adviser Agility Research & Strategy.
Japan is more popular with mature customers, while younger shoppers are heading to South Korean capital Seoul, Banta said.
Seoul’s famous TV dramas and K-pop stars have as much, or more, influence on shoppers as traditional advertising campaigns for luxury brands. A recent example: Jimmy Choo shoes worn by Gianna Jun on the TV show “My Love from Another Star” sold out in stores across Asia.
But Banta said old favorites Hong Kong and Singapore could make a comeback as Europe becomes more expensive, and Asians grow increasingly wealthy.
“We see the Asia Pacific retail environment becoming increasingly competitive as shoppers will head back into stores in the region due to the price changes in Europe,” Banta says.
Here’s what cashed-up shoppers are hunting for:
Sulwhasoo ‘Timetreasure’ Renovating Serum – Seoul
A price tag of hundreds of dollars for a 50ml bottle of anti-aging serum doesn’t stop moisturizer addicts from flocking to South Korea. Beauty products are a serious business for the country, with the rest of the world taking notice of all the products Korea has to offer.
Moynat boutique – Hong Kong
The trunk-maker’s first boutique outside of France sits in Central’s Landmark in a 400-square foot space. One of its prized offerings is the limited edition mini Réjane, a crocodile bag with diamonds on its clasp priced at $124,300.
Café Dior – Seoul
This year, the French designer fashion brand set up shop in Gangnam, offering a six-floor experience called House of Dior. The boutique has a glass-walled café upstairs – Café Dior is a culinary representation of the label, with a menu designed by French pastry chef Pierre Hermé.
Hermès Petit H – Tokyo
Works created from upcycled parts makes for a unique Hermès piece. Using leathers and textiles known in their products to create something new, Petit H is a pop-up series that lasts only a few weeks in locations such as Japan’s Ginza store, designed to promote recycling in a very high-fashion way – offering bags, wallets, necklaces and even a life-size fawn. This limited time offering drew design fanatics to Tokyo. It’s now set up in London.
Taipei 101 – Taipei
What once was the tallest building in the world still has one of the most highly regarded retail spaces on its first five floors. The sixth floor is where the VIP club is, which requires a purchase of over $44,000 in the one day to gain entry. Once in, you’ll have access to a private showroom with the latest in luxury items, private dressing rooms and Chanel spa products.
Three Michelin stars – Tokyo
Culinary experiences and Japan go hand-in-hand, from imported chefs such as Joël Robuchon gaining widespread appeal for modern French cuisine, to local chef Yoshihiro Narisawa’s fusion of European cooking styles with local ingredients.