Message behind the opening of Hysan place and Abercrombie & Fitch in Hong Kong

August 28, 2012 / By

The recent openings of Hysan Place and Abercrombie & Fitch’s (A&F) flagship store in Hong Kong have been the talk of the town recently. The successful marketing campaign for A&F’s flagship store has highlighted the strong demand for featured retail premises despite the high rentals involved. As for Hysan Place, this newly developed 450,000-sq ft shopping centre is the largest retail complex to enter Causeway Bay since the completion of Times Square in 1993. Shoppers and retailers have been hungry for new large indoor-shopping spaces in Causeway Bay. Most important of all, many tenants at the complex are new to Hong Kong and most of the products they are selling relatively affordable for the middle-class. To me, the main attraction is being able to shop at Eslite Bookstore, which reminds me of the leisure of travelling in Taiwan. Surprisingly, Hysan Place also provides the ambience of a stylish Japanese department store, with its vertical retail components, highly utilised shopping corridors on the upper levels and open-style shops, such as Eslite Bookstore, which is spread over a few floors in the complex.

I saw some news headlines saying that Hysan Place had positioned itself away from mainland shoppers. In my opinion, this statement is both true and false. It’s true that except for the brands carried by T Galleria in the basement, the shopping centre does not have the affluent mainland shoppers’ favourite top-tier luxury brands. Yet, Eslite, Hollister, Gap and some new Asian brands can also appeal to the middle-class and young mainland tourists. In this regard, the slowdown in retail sales growth of luxury items combined with the sustained robust growth of visitor arrivals in recent months are pointing to smaller per capita visitor spending. It therefore presents a potential opportunity gap for middle-tier retailers, who target the more ‘average’ Chinese tourists. Furthermore, commencing 1 September, non-registered Shenzhen residents (i.e. mainly workers and students from other provinces) will be given multiple entries to Hong Kong, which could potentially bring about four million additional mainland tourists on frequent visits to Hong Kong and pose stronger demand for mid-tier consumption items.

Both landlords and tenants are well aware that Hong Kong is a very good incubator for brands (both luxury and mid-end) targeting the mainland market. The recently opened labels brought to Hong Kong by Hysan Place and A&F flagship store, the earlier flagship Hollister and Forever 21 stores and the upcoming Tommy Bahama store are all targeting the mid-market, and are sought after by both the locals and visitors. Whether they are satisfying untapped demand or creating demand, I am glad to see these mid-market labels expanding in Hong Kong, which will help better balance Hong Kong’s retail market landscape and strengthen the city’s position as Asia’s top shopping node.


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