A Chow Tai Fook store in Hong Kong
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Chow Tai Fook Jewellery Group is planning to shut down 15 stores in the main tourist destinations of Causeway Bay, Mong Kok and Tsim Sha Tsui in Hong Kong by March 2021 as part of an existing retail strategy.
While business in Hong Kong remains subdued as a result of predominantly violent anti-government protests since June last year, Chow Tai Fook is fortifying its presence in mainland China with the opening of approximately 600 points of sale (POS) in FY2020.
“The group would seek POS network optimisation in Hong Kong to enhance store profitability,” explained the company. “With more than 40 POS with leases about to expire in FY2021 (April 2020 to March 2021), we will review store performances.”
The new stores to be opened in China meanwhile will mainly be in lower-tier and county-level cities.
“We are also proactive in expanding our retail network in neighbouring countries, which offer high growth potential. During the first three quarters of FY2020, the group expanded in new markets such as the Philippines and Thailand,” Chow Tai Fook said.
Veronica Wang, partner at OC&C Strategy Consultants, said it is not surprising for tourist-oriented retail stores to face challenges given structural changes in Hong Kong’s retail landscape, adding that network rationalisation is a “sensible step” to cushion the impact of lacklustre demand.
“The tourist-led retail structure in Hong Kong will change in the future – recent disruptions have accelerated the process. With the growing mobility of Chinese consumers, travellers now have a much broader choice of destinations to shop, from Japan, Korea in Asia to France and Italy in Europe,” noted Wang. "Therefore, Hong Kong will gradually lose its position as a shopping paradise and the demographics of Chinese travellers who go to Hong Kong will be different from before."