Retail rents in Hong Kong have long been among the most expensive in the world, but for years the high operating costs have been worthwhile. Luxury brands could capture not only the highly sophisticated local shoppers, but also mainland Chinese and other foreign tourists. That was, until recently.
Sales have slowed markedly for luxury brands in Hong Kong over the last two years. As a result, Kering—the parent company of Gucci, Bottega Veneta, and Yves Saint Laurent—is considering closing some stores.
Political and economic changes in mainland China, acerbated by the umbrella movement of mass civil disobedience in Hong Kong, have had a negative impact on Hong Kong’s economy. After China’s new leader Xi Jinping launched a crackdown on extravagant spending and corruption in 2013, mainlanders have been spending less.
