Hong Kong Jewelers Consider Opening on the Mainland to Boost Sales:
China Daily: Despite falling rents, many luxury retailers in Hong Kong are still facing dwindling sales, forcing some of them to look for opportunities in smaller cities and townships on the mainland.
Cindy Yeung, the chairperson of Emperor Watch & Jewellery (HK) Co. Ltd., said on Monday the company plans to open another 10 to 15 new stores in second- and third-tier mainland cities, while actively looking for the right locations for outlets in Singapore, South Korea and Thailand.
Emperor’s same-store sales fell in the first quarter of this year.
“The drop in high-end consumption is really taking its toll on luxury goods retailers like Emperor Watch & Jewellery, whose primary collections are targeting mainland visitors with stronger purchase intentions,” said David Wong, the executive director of industrial and commercial property firm Midland IC&I.
He attributed the sales decline to the mainland’s massive anti-corruption campaign and the negative perception of the recent anti-parallel trade protests in Hong Kong.
Yeung estimated that total rent for Emperor’s stores declined by up to 20 percent, which is in line with the market trend. Eight of the stores will renew leases this year, and its possible that one or two will close as the rent is likely to stay the same. The jewelry chain said in March that it was closing its 12-year-old outlet on Russell Street, Causeway Bay, because of losses.
Wong said the average rent-to-sales ratio of jewelry and watch retailers was 3.8 percent last year, which was significantly lower than the average 13 percent for the catering industry. “Despite the decline in rentals for retail properties, many luxury-goods stores are still having problems making ends meet,” he said.
Industry sources said the benefits of declining rents are taking longer than expected to lift operators’ bottom lines, as retailers had normally signed long leases in better times to secure the properties and they had not expected the sales slump to come so soon.
Yeung said, however, favorable exchange rates have enabled Emperor to mark down prices of expensive watches imported from Switzerland. And more tourists, especially those from the mainland, are going to shop Swiss watches and other luxury items in Hong Kong instead of Europe to take advantage of the stronger euro.
Emperor ruled out large-scale promotional discounts during the off-peak sales season, saying price-cut levels will remain as in previous years.
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© 2015 dpa
