Hong Kong–based jewelry conglomerate and retailer Chow Tai Fook Jewellery announced this week that it will shutter roughly 15 of its 91 Hong Kong stores after their leases expire this year.
The company said in an emailed statement Jan. 14 that it won’t renew the leases starting this April, and cited “macro headwinds”—including the roiling protests that have crippled movement in Hong Kong’s business districts in recent months—as the reason. Chow Tai Fook’s same-store sales have fallen for three consecutive quarters in Hong Kong and Macau. The retailer will open several new stores in mainland China this year.
Bloomberg characterized the coming closures as “the first significant pullback by a luxury retailer after months of fiery demonstrations that have driven tourists away.”
Anti-Beijing protests have rocked the city since November, when residents first took to the streets to protest legislation that would allow the Chinese government to extradite Hong Kong residents to mainland China, among other issues. There have been mass arrests and police violence. The situation has scared off tourists, “particularly Chinese mainlanders, who’re especially important to Hong Kong’s retailers,” reports Bloomberg in a separate article.
Chinese consumers comprise around 80% of total annual visitors to Hong Kong. But the protests have resulted in a record 58% drop in mainland visitors, according to the Hong Kong Tourism Board. In November, retail sales fell by a quarter from the previous year, with jewelry and watch sales tumbling 44%, according to Hong Kong’s statistics department (first reported by Bloomberg).
Jean-Marc Pontroué, CEO of watch brand Officine Panerai, told the media outlet he expects China will soon be usurped by the United States as the world’s biggest consumer of Swiss watches. And the Hong Kong Retail Management Association estimates that thousands of local retailers could shutter in the first half of 2020.
To be sure, many Hong Kong retailers had been under pressure before the protests gripped the city. Mainland metropolises including Beijing and Shanghai have built up their luxury retail corridors, undercutting Hong Kong’s dominance in the category. And online Chinese retailers including Alibaba have further crippled in-store sales, in the same way Amazon has chipped away at the sales of American luxury retailers.
Top: A Chow Tai Fook store in Hong Kong (photo courtesy of Chow Tai Fook Jewellery)
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