The Lines Outside Luxury Stores In Hong Kong Are Like Nothing You've Ever Seen

Mainland Chinese tourists Chanel store Hong Kong's Tsim Sha Tsui shopping districtREUTERS/Liau Chung-renLines outside Chanel!

Before landing in Hong Kong, I thought Paris’s Champs-Elysées, London’s Bond Street and Tokyo’s Ginza and Omotesando districts were pretty slick luxury store meccas. Queues generated by Chinese Mainlanders outside Louis Vuitton’s flagship on the Champs-Elysées were a mesmerising sight, yet an exception, to be fair. Queues in New York exist (or used to exist) outside the more volume-driven Abercrombie & Fitch and Hollister Fifth Avenue stores.

Queues outside most luxury stores on Canton Road in the Tsim Sha Tsui (TST) district of Hong Kong are an everyday feature. And they occur even outside stores of higher-end brands, whether they are Chanel or Cartier, not just the flagship of the more ‘mainstream’ Louis Vuitton or Prada. While the higher-turnover store of many brands used to be the flagship in their home city, today’s reality from both a sales and a margin perspective is that the largest-grossing store (or building) on the planet is usually the one on that famous Canton Road.

Mainland Chinese visitors Louis Vuitton Hong Kong Tsim Sha TsuiREUTERS/Bobby YipLines outside Louis Vuitton!

Many investors who have not been in Asia much, despite covering luxury stocks, doubted me when I told them about the endless queues. I ended up sending them pictures to prove that I had not become delusional. It’s true that some days the queues are artificial, as certain brands seem to be intent on having consumers wait a bit outside even though the store inside is pretty empty. This is a classic example of retailers counting on the gregarious instinct of shoppers: if people queue outside this store, surely it can’t be bad, can it? But generally speaking, queues are real in TST.

Hermes lines luxury shoppers hong kongPHILIPPE LOPEZ/AFP/Getty ImagesLines outside Hermés!

In Hong Kong, freezing is good. If you have not been to Hong Kong, think about it as Des Moines, Iowa, but in reverse. Here you can go from one building to the next while avoiding the heat; there, you avoid freezing by taking passages between the buildings. In Hong Kong, you can go around the entire ‘Central’ part of the Hong Kong Island without having to go out much in the street. Shopping malls and the Central Elevated Walkway enable you to keep well protected from the heat and humidity across the entire Central — Admiralty area. It is a bit like the building connections in Des Moines to avoid freezing.

Often I have been to TST on shopping mall visits — yes, that’s my job — and ended up shivering in the Cartier, Chanel, Duty Free Shoppers (DFS)7 and Omega stores as the air conditioning was on full throttle.

Intrigued and frankly annoyed as I started sneezing when it was summer outside, I finally asked a shopping attendant why I felt I needed a duffel coat or, better, one of those fashionable Moncler down jackets in their store despite the heat outside, and there I had it: it’s chic, it’s luxury, it’s a sign of wealth, it’s for the mainlanders.

And after experiencing it a while, I started to realise that there was a direct correlation between how cold it was and how mainland dominated a shopping district had become. Obvious for all but new to me: Hong Kong retail was not about Hong Kong locals but about retailers tripping over each other — almost literally if you have been over on Chinese New Year or the mid-autumn festival weeks — to cater to mainlanders.

This leads to the most shocking of facts for the luxury sector. Hong Kong, a city of 7 million souls, does as much business in luxury as Mainland China, a subcontinent of 1.3 billion inhabitants.

But you understand, of course: Hong Kong is not about Hong Kong. It’s about wealthy Chinese spending abroad.

Excerpted from “The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun” by Erwan Rambourg; ISBN: 978-1-118-95029-6. Copyright © 2014 by Erwan Rambourg. Reprinted with permission of Wiley.

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