PARIS/MILAN (Reuters) - Luxury brands are likely to retreat from Hong Kong as the city is wracked by protests at a time when wealthy Chinese shoppers are staying on the mainland, consultancy Bain said on Thursday, highlighting a shift that is reshaping the global industry.
Sales growth for companies making goods like jewelry, high-end fashion or handbags would come in at the low end of its expectations in 2019 due to the Hong Kong turmoil, according to Bain, which produces closely-followed forecasts for the sector.
Global luxury goods sales were on course to expand to 281 billion euros ($310 billion) in 2019, its study showed, growing 4% at constant currencies, at the bottom end of its previous 4% to 6% forecast and down from 6% growth last year.
The Hong Kong pro-democracy protests weighed on third-quarter sales growth at firms from Cartier owner Richemont (CFR.S) to Germany’s Hugo Boss (BOSSn.DE), as the flow of visitors dwindled and retailers closed shop temporarily.
Luxury brands, which have around 1,000 stores in the Asian shopping hub, are likely to start shutting some permanently, Bain said.
“Local customers cannot sustain the 1,000 stores in the mid-term,” said Federica Levato, a partner at Bain in Milan.
Luxury sales in Hong Kong, which hit a peak of 10 billion euros in 2013, are likely to drop to 6 billion in 2019, Bain said. This would mean the city that once accounted for around 5% of global sales is now closer to 2%.
And while the demonstrations might be a temporary disruption, a more structural shift is at play in the shopping habits of well-off customers from the Chinese mainland whose Hong Kong spending have long been buttressed sector sales.
Despite China’s economic slowdown, shoppers
