The closure of the watch brand TAG Heuer’s outlet in Causeway Bay in August this year is a sign of luxury brands’ withdrawal from Hong Kong and the end of the city’s status as a center for Asian luxury goods.
Following TAG Heuer’s exit, luxury fashion brand Coach pulled out its flagship store in the Central District of Hong Kong on Aug. 31, two years before its lease expires.
Women’s shoe retailer Belle International in Tseung Kwan O also closed on the same day, while Hong Kong jeweler Emperor Watch & Jewellery Limited also announced plans to terminate its store’s lease early.
The Guangzhou-based paper said that the exodus of luxury brands from Hong Kong has raised concerns about whether the trend may spread into mainland China.
High rental fees were one of the reasons for the closures, the report said. Store rentals in Causeway Bay in the first quarter of 2014 stood at HK$43,310 ($5,580) per square meter, making it the most expensive in the world next to New York’s Fifth Avenue shopping district.
With its store’s closure in Central, Coach will save HK$180 million ($23 million). It had been paying rental fees of $7.2 million ($930,000) per month.
TAG Heuer ultimately decided to close shop after negotiations for a rent reduction with its landlord fell apart.
Hong Kong is gradually losing its appeal to mainland Chinese shoppers, who are becoming more inclined to go to Europe, the U.S., Japan and South Korea to shop.
Total retail sales in the city in 2014 have decreased 0.2 percent from the previous year to HK$493.3 billion ($63.65 billion), its first negative growth in the retail sector since the Hong Kong government launched the individual visa scheme for mainland visitors 11 years ago.
Between March and July, the region’s retail sales fell even further, posting a 0.4-percent decline year-on-year in June and 2.8 percent in July.
But despite increasingly poor sales of luxury goods such as jewelry and watches in Hong Kong, medium- and low-priced goods, including food stuffs, liquor, and tobacco, have been growing steadily. According to Southern Metropolis Daily, foodstuff sales rose 7 percent year-on-year in July, an indication that shoppers visiting Hong Kong are shifting from luxury items to daily necessities.