Chanel Could Pull the Plug on its Hong Kong Show

Due to recent protests and violent actions in Hong Kong, Chanel’s scheduled cruise show now faces uncertainty. The French luxury brand had planned to re-stage its May Cruise 2019/20 Show on November 6 at the city’s Kai Tak Cruise Terminal in Victoria Harbour. But just a few days ago, in a statement to Women’s Wear Daily, a Chanel representative stated that the company is still considering other options and may move their early spring holiday series elsewhere. “Like all brands in Hong Kong, we are closely watching the development of the situation, but have not yet made a decision,” they said.

Since the beginning of June, hit by protest, the Hong Kong economy has been declining, impacting several industries that are core to the development of the city, including tourism, trade, retail, and logistics. Many shops, such as cosmeceuticals, cosmetics, and gold jewelry stores have been shut down. It was reported that high-end luxury shops in the Harbour City area, usually with long queues outside have seldom seen the crowd outside. Over the past two months, protests and sporadic violence in the city have impacted Hong Kong’s traffic as well. Last week, activities at the Hong Kong International Airport resulted in the cancellation of nearly a thousand flights, and an “Oppose violence, save Hong Kong” rally at the Tamar Park on a rainy Saturday was estimated at nearly 1.7 million people.

Hosting fashion shows is a way for brands to broadcast their DNA and assert their influence in a market. Following their initial show at the Grand Palais in Paris, Chanel’s location choice of Hong Kong for a second show was to be a strategic one to help reaffirm the city’s dominance in the luxury market. Given that it’s also the first show from the brand’s new creative director Virginie Viard, it would be a way to establish the status of Karl Lagerfeld’s new successor.

In Chanel’s 2018 earnings report, released in June of this year, the brand’s sales in the Asia-Pacific market, including China, soared by more than 20 percent to $4.7 billion, surpassing Europe as the world’s largest market for the first time. Chanel’s sales rose 10.5 percent year-on-year to $11.1 billion from approximately $10.9 billion while operating profit increased 8 percent to $3 billion. The brand also launched its perfume and beauty line on Tmall this August, showing significant overall investment in this market.

Perhaps more immediate than the potential of canceling their show, many luxury brands have already felt a market pinch thanks to the current political climate. Fashion retailers such as Prada, Burberry, and Lane Crawford all have shut down stores in Hong Kong, and local retailers say the downturn may continue until the end of the year — even affecting critical Christmas sales. The Hong Kong Retail Management Association has previously warned that if protests continue, the retail sector could see a double-digit decline for 2019.

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