Despite leading the market for more than a decade, according to the Sell-Out Index, which measures the aggregated sales performance of the watch and jewellery industry in selected markets every month, in Hong Kong the value of retail sales of watches and jewellery in the first half of 2021 totalled US$2.5 billion, whereas it was US$5.7 billion during the same period in 2018.
But with its tourism-driven sales slowed by anti-government demonstrations in 2019 that deterred visitors from the mainland, and then brought to a halt entirely by a coronavirus-related ban on visitor arrivals since March 2020, the city’s retail sector has taken a beating.
Hong Kong’s watch retailers have had to reorient themselves to serve local buyers, while Chinese shoppers, unable to leave China, have redirected their spending domestically – making China the leading export market for luxury Swiss watches.
Shoppers from mainland China are spending less and less in Hong Kong. While the Hong Kong government has allowed up to 2,000 residents a day from mainland China and Macau to enter the city without having to quarantine since September 15, this is unlikely to deliver a dramatic lift in sales of Swiss luxury watches.
Despite the wealthy among Hong Kong’s 7 million-plus residents being some of the world’s most insatiable watch buyers, industry experts are worried the market may never regain its status as the top destination for Swiss watch exports and as a hub for the re-export of watches to mainland China.
If luxury watch retailing in Hong Kong is to recover, it is essential that international and Chinese tourists return in numbers to the city soon.
Tough challenges lie ahead for the luxury watch industry in Hong Kong, but as Amrita Banta, managing director of luxury consulting company Agility Research & Strategy, points out, other regions are struggling to compete with China’s sudden popularity as a place to shop for watches and jewellery.
Watch brands have now focused on exporting directly to China. If pricing is very competitive in China then the reason to buy in Hong Kong will be less and less over time. But if prices are competitive and close to Europe pricing, then even buying in Europe will also get less and more will be bought locally in China,”she explains
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