CITI: We Just Checked Out Hong Kong Women, And This Is What We Saw

prada Hong Kong

Photo: AP Images

Hong Kong’s Tsim Sha Tsui is the fourth fastest growing shopping district in the world and is a shopping destination in the region. So retailers keep an eye on shopping trends in the region.Citi analysts went to Hong Kong and found that mainland tourists are as likely to drive local retail as the locals.

They interviewed 130 female Hong Kong residents about their prospective purchases. They found their favourite brands based on packaging, and in-store experience. But more importantly, they were very likely to buy luxury goods over the next year, despite the economic doom and gloom. Here’s an excerpt.

Hong Kong is still the go-to retail centre for luxury goods in Asia

'Received wisdom heralds the Mainland tourist as the driver of local retail, but we argue that significant leading insights into positive and negative brand traction can be garnered through local residents themselves, not least due to the high sophistication of the HKSAR consumer. '

HKSAR - Hong Kong Special Administrative Region

Source: Citi

54.5% of women interviewed prefer shopping in malls to independent stores

'Our respondents preferred to shop mostly in Central district malls (54.5%), and this didn't seem to fit at all with some local brands' strategies of having independent stores in more out-of- the-way locations. Clearly, being located in shopping malls has a significant impact on margins, although again given that we clearly identified one retail market rather than luxury goods vs. lifestyle, we would think that the opportunistic lifestyle retailer would be keen to be amongst the luxury brands.'

Source: Citi

And the 130 women interviewed wanted more lifestyle brands in Hong Kong

Shoppers wanted more stores from Abercrombie & Fitch, GAP, H&M, Zara, Marks & Spencer, UNIQLO, Accessorize, American Eagle, Club Monaco, and French Connection.

Source: Citi

Despite what marketers say there is just one retail market, the women didn't differentiate between luxury and lifestyle

'There isn't a vanilla ice cream buyer and a different type of person who buys strawberry -- there are just ice cream buyers who sometimes buy vanilla and very occasionally buy strawberry.''

Source: Citi

Women seek out certain brands when they want to treat or reward themselves

'If the average Hong Kong woman is going to treat herself, shoes are very clearly a way to go. …Among the top brands here were Chanel (echoing the 'availability' concept), Hermes, Cartier, Jimmy Choo, Prada, Bottega Veneta, Christian Louboutin, Salvatore Ferragamo, Louis Vuitton, Chloe, Club Monaco, and Max & Co.'

Source: Citi

Packaging impacted the women's purchases, but mostly when it came to gift giving

'There wasn't a huge amount of crossover with the previous category. This may be suggestive of the fact that the concept of packaging conjured up the idea of receiving a gift from others. ...The category was won by Tiffany by a country mile (36%), followed by Chanel (19%) and Hermes (18%).'

Source: Citi

In-store experience was also important to the women

Tiffany won the top prize but Abercrombie and Fitch came in second because of its emphasis on the 'senses of sight, sound, smell, touch and energy'. Interestingly, local retailers G2000 and Giordano made the top 10 because of the 'welcoming and attentive professionalism of their staff.'

Source: Citi

The women cared about goods being overpriced relative to quality

'People in Hong Kong ─ being just over the border from the world's looms and workshops ─ are more aware of what goods cost to produce than people in the West. We hadn't anticipated the relationship, but a second intriguing explanation is that what we perceived as a negative brand attribute might just as easily be thought of as suggestive of 'brand value', where respondents were still wanting to buy brands for some other reason than simply the perceived quality of their merchandise.'

Source: Citi

Chanel is considered the most 'archetypal fashion brand' by the 130 women polled

'Prada was also highly salient, which we attribute to it having had a major share listing in Hong Kong in the couple of months preceding the survey. This seems to represent a triumph for awareness through advertising. We were surprised to see lifestyle brands H&M and Zara as being so salient, since, as we mentioned, we were expecting to uncover exclusively archetypal luxury names.'

Source: Citi

Lack of exclusivity was definitely a negative attribute for brands

'Being overbought can be a double-edged sword for any brand. In the U.S., Abercrombie & Fitch has tried to distance itself from the TV show Jersey Shore. In Hong Kong, there are no obvious local equivalents to sully a brand's cachet. Being in the 'not exclusive enough' category is unlikely to bother Zara or H&M, which both clearly have by far and away the highest penetration on the island.'

Source: Citi

Economic doom and gloom stories are unlikely to hinder female shoppers

Despite concerns about the regional economy, 58.7% of respondents said they were confident about the outlook for the Hong Kong economy, suggesting that shopping habits would be fairly unaffected by economic doom and gloom.

Source: Citi

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