Retail properties

More fast-fashion chains move into Shenzhen shopping centres

Shoppers across the border are staying at home as international brands move into new malls that are a match for Hong Kong's

PUBLISHED : Wednesday, 17 April, 2013, 12:00am
UPDATED : Wednesday, 17 April, 2013, 5:31am

The flow of shoppers from Shenzhen to Hong Kong is slowing as more international fast-fashion chains open for business in the border city.

"Shenzhen shoppers looking for international fast fashion [high turnover] brands used to love going to shop in Hong Kong," said Linda Lin Dan, retail services director in Shenzhen for property consultancy Colliers International.

"But since more of these brands began setting up their stores in Shenzhen in recent years … an increasing number of middle-class consumers are staying to shop in Shenzhen."

Shenzhen stores frequently held promotions and offered discounts so the price difference with Hong Kong was not that significant, she said. And newly opened malls in Shenzhen provide shopping environments that are just as attractive as those in Hong Kong.

Shopping in Shenzhen also meant the hassles of having to travel to Hong Kong could be avoided.

Last month, Forever 21 said it would open a 2,000 square-metre store in Coastal City, a shopping arcade in Shenzhen's Nanshan district this summer.

The opening will be the third for the American clothing retailer on the mainland and comes just a year after it opened in Hong Kong and later set up shop in Beijing and Shanghai.

Zara, H&M and Uniqlo were early entrants to the mainland market. Now, Lin said, other international fast-fashion brands including Gap, Muji and Topshop had begun opening in large shopping centres in Lo Wu, Futian and Nanshan in recent years.

Their success had drawn the attention of more fast-fashion chains to Shenzhen.

Thomas Lam, who is Knight Frank's head of research for greater China, said the trend would have an impact on cross-border shoppers coming to Hong Kong, but retail sales in the city had not yet felt any impact.

Profit margins for retailers in Shenzhen would be higher than margins enjoyed by outlets in Hong Kong, where rents are higher, he said, but fast fashion brands still saw Hong Kong as a stepping stone to the mainland market. Therefore, they were likely to continue testing the market by opening one or two outlets in Hong Kong first.

"In terms of prices, it's still more attractive to shop in Hong Kong because we don't have that many taxes. An item may carry a price tag with the same number on it, but one is in Hong Kong dollars and the other in yuan, meaning it is about 20 per cent more expensive to buy on the mainland," he said.

Denis Ma On-ping, director of research for the greater Pearl River Delta region at Jones Lang LaSalle, said Hong Kong remained a primary location for overseas brands to set up in the region, and many still wished to come to the city.

"Despite the high rents, many retailers say they are still making a profit in Hong Kong," he said, adding that he had not seen any slowdown in demand for retail spaces in the city.

"Many shoppers from Shenzhen come to buy mainly toiletries and cosmetics," he said.

"But they will also go and shop at Forever 21 if there is one [nearby]. It's part of the shopping experience."