Trench coats designed for the streamlined silhouette and the autumn collection of high-end leather bags to carry the most expensive oud fragrance on the market. You can get them all by up to 20 percent cheaper at Burberry’s Causeway Bay outlet in Honk Kong. One of the most iconic British luxury brands, Burberry has been continuously slashing prices in the region. The British pound is fighting to stay afloat in the Hong Kong and mainland market. If it doesn’t manage to keep its head above water, Burberry might find itself at the bottom end of consumer’s preferences.
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Headquartered in London, Burberry has so far opened boutiques in 48 different countries.
In the last year, Burberry sales in China and Hong Kong have been sinking by a fifth. However, the luxury house announced a turnaround plan this summer. It consisted of a three-year program of cost savings that would sum at least $100 million. It also included focusing on online sales and power-advertising its biggest hit – leather bag collections, while narrowing the product range.
This strategy followed the UK referendum in June in which the British population voted to leave the European Union by a majority of 52%. Since the Hong Kong dollar is pegged to the US dollar, the currency appreciated in the region, while the pound tumbled by 9.75%.
Brexit has dealt a major blow to an already waning influence that the UK was struggling to hold on to in Hong Kong. British luxury brands have been scrambling for suitable strategies to blunt the sharp price differentials across international markets.
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Burberry adopted a low profile tactic. Last year, members received news of a 10% discount on the staple trench coats and cashmere scarves. However, this week Burberry kept a hush-hush attitude and let the price tag do all the talking.
However, the lower prices did not seem to boost a frenzy at the British luxury brand’s Hong Kong outlet. The radio silence might be unusual considering shoppers’ reaction when Chanel announced a discount last year due to the tumbling Euro. Then, the queues ran in the hundreds in front of the French luxury house outlet.
Hong Kong hosts around 600 UK businesses. The first to readjust investment strategies and focus them inwardly towards the UK are the British luxury brands. For example, popular fashion chain Ted Baker revised by half the prices in its Hong Kong outlets.
“We are not surprised by the price cuts. We believe other brands, not just British ones, will also cut prices in Hong Kong,” said Aaron Fischer, regional head of consumer research for the brokerage and investment group Credit Lyonnais Securities Asia.
However, British luxury brands feel right at home on British soil. As they should. The slumping pound has been working wonders to attract Chinese and Middle Eastern high-end tourists on the shopping lane in London – the world’s sixth largest market for luxury consumers.
Here, the pound reflects how in weakness can lie strength. But, as mentioned earlier, Britain’s gain comes at the expense of overseas luxury retailers.
Even so, not all British luxury brands hurried to cover the gap between their domestic and Hong Kong markets. Price labels at Vivienne Westwood, Mulberry, Alexander McQueen still read exorbitant four-digit figures that make the brand a luxury choice.
