Luxury brands and fashion retailers in Hong Kong have taken a battering this year as a combination of COVID-19 and political tensions with mainland China have kept high-spending tourists away, but the question is whether they can recoup their losses by readjusting their strategies to suit the tastes of local consumers.
Hong Kong welcomed up to 65.1 million mainland Chinese tourists as recently as 2018 and, to meet this demand, many global luxury brands opened more stores than the local population of 7.4 million could sustain.
But with mainland Chinese consumers staying at home, it is expected luxury brands will be forced to close at least two or three outlets and refocus their attention on a smaller pool of local customers.
And that will require rebuilding their relationship with Hong Kong’s top spenders and adapting their retail strategies to meet their preferences, Vogue Business reported.
For a start, Hong Kong’s luxury consumers tend to be more conservative than their mainland Chinese counterparts. They also have different tastes, use different social media platforms and base their luxury purchases on different values.
According to Amie Song, an adviser at research firm Gartner, that will require luxury brands to rethink their product offerings, pricing, communication and organisational structure, such as employing more sales staff who speak Cantonese and English. “Businesses are targeting a totally different consumer group here,” she said.
This extends to digital behaviour, which Song said is fundamentally different from mainland consumers because Hong Kong consumers use Google Search as the starting point for their purchase journey and are not active on Tmall or WeChat. She suggested that brands update their Hong Kong websites at a minimum.
Elisa Harca, co-founder of agency Red Ant Asia and vice-chair of the British Chamber of Commerce in Hong Kong, agreed that luxury brands should ramp up their online appeal to a local population that traditionally has been more at ease shopping in physical stores.
“Most brands under-invest in their Hong-Kong-specific digital and e-commerce experiences and still don’t offer locally fulfilled e-commerce in Hong Kong,” she said.
For example, Hong Kong luxury consumers have traditionally valued the exclusive personalised service that can be experienced when shopping in-store.
“How to replicate that kind of exclusive personalised services online is key for a lot of luxury brands to win the attention of the Hong Kong luxury consumer,” said Jane Zhang, beauty and fashion analyst at Euromonitor.
Luxury brands also should note that Hong Kong consumers respect sustainability, quality and minimalist design. And when it comes to marketing, the analysts Vogue Business spoke to advised brands to be tactful and to avoid producing any creative that could cause offence on the mainland.
Sourced from Vogue Business