In Hong Kong, Political Unrest Challenges Traditional Retail

 

 

 

For decades, Hong Kong has been a shopping mecca, a destination for luxury consumers throughout Asia. It’s estimated that the city contributes roughly 5 to 10 percent of global luxury sales. Tiffany &Co. alone has ten stores across Hong Kong and Kowloon. Other brands with only half that number still consider adding to their portfolio.

 

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What will happen to the vibrancy of everyday life in Hong Kong — is this the new normal?

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But many are now giving that a second thought.

 

Hong Kong is embroiled in seemingly endless protests over China’s hardline stance towards the city’s autonomy and civil rights, a battle which began over an extradition bill that would give China the right to remove those who they consider dissidents.

 

 

Police fire teargas and fire rubber bullets at demonstrators in Causeway Bay. The months-long protests and violence have disrupted business and caused a dramatic decrease in tourism.

Now, Hong Kong’s economy, heavily dependent on tourism, is officially in a recession.

 

“To be honest, you really cannot underestimate the impact the protests are having. Mainland Chinese have pretty much stopped coming to Hong Kong to shop,” says Francis Cheng, CEO of NumberOne PR.

 

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“These kinds of [political] events impact the kinds of stars and celebrities we can attract, because none of them want to get asked political questions on the red carpet.”

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“Even people who live in Hong Kong are avoiding going to stores. Hotel occupancies are way down, and restaurants and bars are suffering. It’s not just an issue of safety. I think it’s a morale issue too.”

 

Celebrities are the key to successful brand events in Hong Kong. At top, an event for Hong Kong Tatler. Below, PR powerhouse Francis Cheng at a Valentino event, where he poses with pop singer Tsang Lok Tung (center) and TV host Rikko Lee.

Cheng knows a thing or two about how low morale can affect retail sales. He remembers how SARS nearly shut down the city. For over a decade, Cheng has overseen countless major fashion events in Hong Kong, ensuring that those who matter are there on the red carpet. When luxury brands need a big push, they turn to Francis.

 

“These kinds of [political] events impact the kinds of stars and celebrities we can attract, because none of them want to get asked political questions on the red carpet, or worse, get attacked on social media,” says Francis. He says many have chosen to leave Hong Kong temporarily because of the political climate.

 

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 “You really cannot underestimate the impact the protests are having. Mainland Chinese have pretty much stopped coming to Hong Kong to shop.”

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And brands worry just as much — if not more — than Francis. On March 14, a Valentino store event at the upscale Landmark mall was pulled off without a hitch and with all the right people attending, but not far away, a pro-democracy group held a sit-in protest at the Central Government Complex.

 

Since then things have dramatically escalated, making most events virtually impossible.

 

 

At top, Kenneth Chu works in sourcing and design for a U.S. department store. He’s seen first-hand the random police violence that has been prevalent throughout the protests. Below, a picture he took in Causeway Bay of police tackling a protester to the ground.

Protesters and their supporters have taken to posting videos of the rampant police brutality. Traffic is snarled by demonstrations and tear gas. Meanwhile, some companies have taken to warning their employees to keep a low profile.

 

“They have told their employees to be cautious and not voice their political opinions or even forbidden them to join protests,” says Kenneth Chu, who works in sourcing and design for a major US retailer.

 

“I feel devastated that politically so much has changed in Hong Kong, but the protests strengthen my self-identity as a Hong Konger.”

 

 

At top, queues are common sights at stores like Hermès on Canton Road. But with the recent instability, Mainland Chinese have kept away, leaving brands like Chanel largely empty.

Just the other weekend, Kenneth went shopping in Tsim Sha Tsui. The “luxury row” stores along Canton Road ordinarily have long queues of Mainland Chinese waiting to get inside. Kenneth found the streets surprisingly empty.

 

“I don’t see any retailers or brands taking any extra steps to find other ways to gain more shoppers,” says Kenneth. “I think they know people are just going online instead.”

 

For Francis Cheng and others who work in the industry, digital marketing is a key part of the new strategy.

 

“Right now, all I can really do is double down on the kind of CRM that we do and reach out to our key customers through online promotions and messaging. We just don’t have a lot of options when it comes to marketing.”

 

 

At top, a sign at the door of a Lane Crawford store explains they are closed due to demonstrations. The company has added a bolder cross-border e-commerce strategy for its Mainland Chinese customers.

 

Department stores like Harvey Nichols and Lane Crawford are literally bringing the store to VIPs, shipping racks of their favorite designers to try on in the comfort and privacy of their own home.

 

For those critical Mainland shoppers, strategies include cross-border e-commerce, which has been a critical tool for Hong Kong’s iconic Lane Crawford department store. The brand even offers free shipping and mobile payments like WePay and AliPay.

 

But what will happen to the vibrancy of everyday life in Hong Kong — is this the new normal? For Francis, it’s a worrisome thought.

 

“I’m a publicist, so my role pretty much dictates that I don’t get political or personal. But this is wearing me down. I am concerned that the Hong Kong I know and love may disappear. China is very, very serious. I just don’t know how this is going to end.”

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