Prada will shut its boutique at the Peninsula hotel shopping centre on December 31 in the latest sign that the retail slump is hurting high-end brands. The Italian luxury fashion label made its debut in the city with its 3,091 sq ft outlet at the landmark Tsim Sha Tsui address in 1986.
But with fewer rich mainland Chinese shoppers visiting the city, analysts warn more luxury stores could fold after expanding too rapidly in the past decade.
“The tenancy contract between The Peninsula Arcade and Prada will conclude on 31 December 2016,” a hotel spokeswoman said via email.
A shop assistant at the boutique told the Post that some sales personnel had already left and others would be relocated to the brand’s other shops.
A Prada spokeswoman said the company had “no comment” on the closure. It currently has 11 stores in the city.
Prada’s total sales in Greater China tumbled 24.4 per cent in the first six months of the year on a yearly basis, as “Hong Kong and Macau continued to weigh heavily on the region’s contraction”, the company’s latest interim report said.
Premium lifestyle brand Ralph Lauren quietly closed its 20,000 sq ft store in the Causeway Bay shopping hub overnight earlier this month, and British fashion house Burberry is to cut the size of its biggest Hong Kong flagship store in Pacific Place by 50 per cent within the next financial year.
Retail sales of luxury items in the city such as jewellery, watches and clocks, and valuable gifts slumped 19.7 per cent in the first 10 months of the year.
Helen Mak, head of retail service at property consultant Knight Frank, said more luxury brands would have to cut store numbers in the city, which she considered “a healthy adjustment”, after an aggressive expansion in recent years.
“The store numbers of many luxury brands have doubled in the past decade,” Mak said.
International high-end labels were eager to increase their presence to lure rich mainland shoppers who began to flood into the city from 2003 when Beijing eased travel restrictions.
As Hong Kong recovered from severe acute respiratory syndrome – which struck the mainland in late 2002 and Hong Kong in 2003, killing 299 in the city – mainland residents from 49 cities were allowed in as individual travellers rather than having to join tour groups.
But average spending by mainland visitors has dropped to about HK$7,000 per person this year, compared with HK$9,000 two years ago.
“For luxury brands, it is a question of whether Hong Kong is still a place worth investing in,” Mak said, adding that some brands preferred to put resources directly into mainland cities.
This article appeared in the South China Morning Post print edition as:
prada ends its 30-year run at THE peninsula
