HONG KONG: Pro-democracy protests in Hong Kong are not only hitting current sales of luxury brands but may require them to rethink their entire marketing approach in future.
Luca Solca, head of luxury goods at Exane BNP Paribas, claimed that luxury sales had plummeted up to 40% during the recent Golden Week holiday at the start of October.
Luxury watchmakers are particularly vulnerable – as much as one fifth of some leading watchmakers' revenue comes from Hong Kong – and AFP suggested that retail sales had declined by up to half in recent weeks.
French luxury firm LVMH did not put a figure on the effects of the protests but did say they would have an impact on its quarterly results. "We have already noted some negative impact on activity in duty free shops in the third-quarter," said group finance director Jean-Jacques Guiony. He reported fewer shoppers in downtown stores as the ongoing protests had disrupted travel plans, especially by large tourist groups.
While brands are grappling with the short-term impact of the (so far) four-week long protests, the more prescient will also be considering the long-term implications.
In the South China Morning Post, financial writer Peter Guy argued that the protests had changed assumptions about youth, whose aspirations evidently did not necessarily include joining the ranks of the wealthy and powerful in Hong Kong's high society.
In fact, that latter group was in danger of becoming an irrelevant object of contempt, a development that would "dramatically affect how luxury brands engage their next generation of customers".
Today's university student is likely to be tomorrow's luxury customer, Guy said, and their values had to be understood. They had more enlightened beliefs than their elders and would decline to be part of a "social-climbing circus of envy".
Prestigious brands, from fashion to wealth management, will need to rethink how they engage this new demographic, he asserted.
Data sourced from South China Morning Post, AFP, Fashion United; additional content by Warc staff