What Happened: In mid-May, Chanel signed an eye-watering six figure monthly lease for a centrally-located retail space in Hong Kong. While the exact sum has yet to be disclosed, the city’s press cite that the French luxury house has agreed to pay more than $383,000 per month for a ground-floor unit located in Causeway Bay — Hong Kong’s bustling retail and lifestyle district, once occupied by retailers including Victoria’s Secret and Forever 21.
The Jing Take: While LVMH, Foot Locker and other companies have reduced their presence in Hong Kong in recent years, Chanel appears to be taking the opposite approach.
The signing of a three-year lease at Hong Kong’s Capitol Centre signals the French luxury retailer’s renewed interest in the city, as consumer sentiment and retail sales have greatly improved in the months since Hong Kong reopened its borders with China and the world.
Hong Kong’s retail sales increased 15 percent in April compared with the year before and skyrocketed 40.8 percent YoY in March. Meanwhile, the city welcomed over 10 million visitors in the first five months of 2023, according to the Hong Kong Tourism Board. Travel from China and Southeast Asia surged, with arrivals clocking in at over 60 percent of pre-pandemic volumes.
Visitors to the region contributed to much of the retail growth. April’s fastest-rising category — jewelry and watches — saw a 75 percent increase in sales, while cosmetics and apparel rose by 34.8 percent and 38.6 percent, respectively, according to reports. Total retail sales over the first four months of the year rose by 21.7 percent compared with the same period in 2022, according to the territory’s Census and Statistics Department.
Chanel’s takeover of one of Hong Kong’s, if not the world’s, most expensive retail spaces is no surprise given the region’s reopened borders and soaring retail rebound. The French luxury house appears to be banking on the city’s comeback while still hedging other bets on the mainland. And with good reason — despite markedly raising its prices in recent years, Chanel reported double-digit growth in China soon after the nation reopened to the world.
“We’ve maintained a really good momentum in 2023, more or less at the same level of what we enjoyed in 2022. International travel is clearly more prevalent for all nationalities, and China has fully reopened its borders,” Chanel CFO Philippe Blondiaux stated in an interview with Vogue Business last month.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.