High demand among Hong Kong shoppers sees Canada Goose plan flagship store selling arctic winter coats for US$900
Demand from mainland China also plays part in move, as Tourism Board reveals increase in arrivals and the government says retail sales have jumped 12.3 per cent
Canada Goose will open a flagship store in Hong Kong this autumn, tapping into the luxury brand’s appeal among the city’s fashion-conscious residents.
With the coat maker also popular with mainland Chinese, who are returning to the city to shop, Dani Reiss, the president and chief executive of Canada Goose, said being based in the city made sense for the brand.
The news comes as Hong Kong tourist arrivals rose 11 per cent for April compared with a year earlier, a third consecutive month of growth, according to numbers from the Tourism Board. Meanwhile, the government said retail sales jumped 12.3 per cent year on year.
“A lot of people from the mainland often go to Hong Kong to buy products. That’s one of the reasons why it makes sense for us to have a store in Hong Kong,” Reiss said. “Even though it’s a warm-weather climate, [where the temperature] almost never goes under zero.”
The Toronto-based company recently outlined its expansion into China, with two flagships stores in Hong Kong and Beijing respectively, and an e-commerce business on Alibaba’s online Tmall. It will also set up a local office in Shanghai. Alibaba owns the South China Morning Post.
Sales of luxury goods in Hong Kong continued to gain momentum in April. Sales of jewellery, watches and valuable gifts surged 24.6 per cent for the month, year on year, latest figures from the Census and Statistics Department showed. Sales in clothes added 6.3 per cent over the same period.
Canada Goose’s new Hong Kong store, which will be in the IFC Mall in Central, will tap into shoppers’ demand for the “function-first” parkas, which come with a price tag of US$900 (HK$7,000), Reiss said.
“We have people coming from China to travel when we opened our first store in Toronto. I met a guy and he had come all the way from Hong Kong just to come to our store opening to buy a jacket for his wife,” said Reiss, from the third generation of his family to run the company, founded by his Polish immigrant grandfather in 1957.
However, the company is competing with popular fast-fashion retailers such as Uniqlo, which commonly offer down jackets for as little as HK$299.
Thomas Chauvet, European luxury analyst at Citigroup, said Hong Kong remained an important and highly profitable market for luxury brands, even as Chinese travellers were keen to explore new destinations such as Japan, South Korea and Europe.
“Hong Kong retail sales have been well oriented year-to-date, including the latest April data showing continued momentum in high-end discretionary categories such as watches and jewellery, cosmetics and department stores,” Chauvet said. “This was driven by a mix of strong local demand and a sharp rebound in tourist flows from the mainland.
“The stronger Chinese yuan against the US dollar is probably the main reason behind Chinese customers returning to Hong Kong for luxury shopping, as the currency moves offer price arbitrage opportunities.”
Canada Goose sold a majority of the company – about 70 per cent – to Boston-based Bain Capital in 2013, according to media reports. It went public on the Toronto Stock Exchange and New York Stock Exchange in March 2017.
It has been shifting from wholesale to direct retail since 2016, when it opened its first bricks-and-mortar store in Toronto. Its first store in Asia was opened in August 2017 in Tokyo to “better answer the call from Asian customers”.
Overseas personal shoppers, or daigou in Chinese, have been snapping up the luxury parkas in the brand’s physical stores, cementing Canada Goose’s confidence in the Chinese market.
“A sign of ‘one can only buy two per day’ written in Chinese was put up in the Toronto store since January this year,” said Leon, a Chinese student in Toronto. “The Yorkdale store had to do so because so many daigou are buying jackets there that locals find it hard to get the right sizes.”
Reiss said: “From the experience we had in our stores and market research, we are very confident in the demand in the Chinese market. Also we are very happy that [Alibaba group chairman] Jack Ma himself wears the Canada Goose parka as well.”
The luxury brand said it would join the Alibaba Anti-Counterfeiting Alliance as it fights against the copycats in China, “a major problem” for the company.
“We will continue to educate consumers on that, and also continue to hope that the Chinese government take a stronger stance against counterfeits and those people who are counterfeiting,” Reiss said.
“I’d prefer [the imitators] didn’t do that, but I am focused on our brand and our business. I know there are people who are happy to buy fake goods. We just want to make sure that the consumers who want to buy the real thing don’t get ripped off.”