Friday, September 9, 2016
Brexit is causing this British luxury brand to slash prices in Hong Kong
British luxury brand Burberry has cut Hong Kong and mainland prices of its leather handbags by up to 20 per cent in a low profile move, as the pound depreciates in the aftermath of Brexit.
Prices of the brand’s most iconic leather handbags, including some new autumn offerings, were lowered by an average of 10 to 15 per cent last week, a staff member at Burberry’s Causeway Bay outlet told the Post.
The move was meant to reduce price differentials across international markets because of the recent depreciation of the pound, she added.
Another Burberry staff member from their outlet at the Mixc of Shenzhen City Crossing, a high-end mall in Shenzhen, also told the Post that bag prices were lowered last week.
For example, the price of Burberry’s Small Canter in Horseferry Check leather bag was lowered from HK$9,900 to HK$7,900. A new season offering – the Medium Banner in Leather and House Check bag – is now at HK$13,000, down from HK$14,500.
Jon Copestake, chief retail and consumer goods analyst at consultancy Economist Intelligence Unit, said Burberry’s price cut in the city was a “necessary correction” to reduce price differentials across countries – a common move by international luxury brands to fight parallel trading.
“We are not surprised by the price cuts. We believe other brands, not just British ones, will also cut prices in Hong Kong,” Aaron Fischer, CLSA regional head of consumer and gaming research, said.
Since the June referendum in which Britain voted to leave the European Union by a margin of 52 per cent to 48 per cent, the pound has tumbled 9.75 per cent against the Hong Kong dollar to HK$10. 35 as of yesterday.
Burberry’s move also came after Hong Kong sales declined by a year-on-year double-digit percentage from April to June this year, according to the company’s latest financial figures.
The price adjustments did not seem to boost demand, unlike in the case of Chanel in March last year. Hundreds of shoppers queued at outlets across the city after the French luxury brand adjusted down prices due to the falling Euro.
There has been no such frenzy at Burberry’s Causeway Bay store.
Burberry has kept a low profile about the move, and members did not receive any notification, unlike a round of price cuts last year, where members were informed of an 8 to 10 per cent discount on the brand’s iconic heritage trench coat and cashmere scarf.
Burberry sales staff did mention however, that regular mainland clients had asked to reserve certain bags this time round.
Popular British fashion chain Ted Baker also adopted the same approach to adjust the price gap between its domestic and overseas markets, with price tags in the city lowered by HK$100 to HK$200.
Other British fashion labels across the city, such as Alexander McQueen, Mulberry, Vivienne Westwood, have not yet taken action.
Read the original article on South China Morning Post. Copyright 2016. Follow South China Morning Post on Twitter.