Sportswear boom fuels demand for prime retail space in Hong Kong shopping districts

Global brands like Nike and Adidas look to ride the crest of the city’s health awareness wave

PUBLISHED : Sunday, 31 July, 2016, 7:59pm
UPDATED : Sunday, 31 July, 2016, 10:30pm

With the Summer Olympic Games set to kick off in Rio de Janeiro later this week, Western sportswear brands are rushing to snap up space in Hong Kong’s prime shopping districts in another wave of expansion, as more people opt for a healthier lifestyle and retail rents slump.

Undeterred by the lacklustre retail sector in Hong Kong, top overseas athletic brands like Nike, Adidas and Under Armour are poised looking to cash in on consumers’ renewed enthusiasm for sports, experts said.

The latest mini-boom for sports brands in the city comes in stark contrast to the testing times for Hong Kong’s luxury watch and jewellery retailers who are bearing the brunt of falling mainland tourist numbers and an economic downturn.

“Hongkongers are becoming more health conscious and buying more sporting goods,”said Terence Chan, head of retail in Hong Kong with global real estate consultant JLL. “Their sales are resistant to the economic headwinds.”

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More than 100,000 sq ft of retail space in shopping malls and street-level shops have been taken by brands focusing on athletic gear or sports-related services over the last 12 months, according to a report from JLL.

Nike, the world’s largest maker of sportswear and sneakers and its German rival Adidas have both set ambitious goals of targeting more customers this year.

The US-based athletic goods maker plans to open a new outlet spread over 12,000 sq ft in the bustling Tsim Sha Tsui district, while Adidas has leased more than 48,000 sq ft in Central, Causeway Bay, and Tsim Sha Tsui – the city’s prime shopping locations to launch their flagship stores.

“Sports-focused brands were very active in the leasing market during the first six months of this year,”the report said.

Upscale shopping malls such as IFC in Central and Pacific Place in Admiralty, where luxury brands such as Gucci and Chanel traditionally cluster, have also joined the push for having more sporting goods retailers in their facilities.

China’s sportswear makers begin to sweat

“Hong Kong residents account for much of the sportswear shoppers in Hong Kong as they gear themselves up for more outdoor sports and fitness activities. Hence the dwindling number of mainland tourists is not that big a challenge for sports retailers,” Chan said.

Hong Kong retail figures rang up the worst quarterly performance since 1999 during the first three months of this year, dragged down by shrinking tourist spending.

With the market set to swell, Chan revealed that several Western mid or niche market sports brands had been in touch and are keen to have a presence in the city, noting that such momentum could last for up to two to three years.

“The retail rents in general are in a correction mode and it opens a window for them to break into the Hong Kong market now,” Chan said. “In addition, they can also make Hong Kong the gateway to mainland China.”

However, GF Securities analyst Albert Yip argues that the growth would be gradual for the sporting goods sector as a whole due to the downward trajectory of global economic growth.

“Having said that, the upcoming Summer Olympics is still going to add some fuel to their businesses as a typical ‘seasonal effect’.”