Luxury Goods in Hong Kong, China
EXECUTIVE SUMMARY
Value growth for luxury goods slows in 2012
Luxury goods experienced a slowdown in current value growth for 2012 against 2011,largely attributed by the unstable economic conditions brought about by the 2011 Eurocrisis as well as the slowing down of the Chinese economy. While consumers'sentiments were still relatively strong, spending continued to tilt towards a more cautiousend. Depreciation of Euros also saw more consumers heading to Hong Kong forholidays and in turn purchasing luxury goods from there to take advantage of the highercosts savings.
Influx of Mainland Chinese tourists benefits luxury goods
The growing affluence of Mainland Chinese tourists saw them increasingly demand luxurygoods to reflect their status. Close proximity of Hong Kong to Mainland China in additionto it being a tax-free shopping destination attracted Mainland Chinese tourists topurchase luxury goods from Hong Kong. This is especially true with the high import taxeson luxury goods in China that drove Mainland Chinese to take advantage of the costsavings to be gained in Hong Kong.
Concentration of players in luxury goods
The competitive environment of luxury goods was concentrated in 2012, with each playerenjoying dominance in certain categories. Affordable luxury brands such as LouisVuitton, Gucci, Burberry and Prada continued to account for the bulk of sales in luxuryaccessories and designer apparel, owing to strong consumers' familiarity with thebrands. However, mature consumers of luxury goods were increasingly showing signs oftrading up to absolute luxury brands such as Chanel and Hermès in order to accentuatetheir status.
Store-based retailing dominates luxury goods sales
Boutiques selling luxury goods dominated value sales as consumers prefer to see, feeland try the item physically before purchasing. The comfortable and luxurious environmentof these boutiques also attracted consumers to shop there as they indulge in the entireservice experience. While online retailing was present through private shopping clubssuch as Reebonz, product authenticity remains a key concern for consumers whenpurchasing luxury goods online. However, attractive prices offered by these shopping clubs had already created a relatively strong following of consumers by the end of thereview period.