Social unrest a wake-up call for local retailers

September 10, 2019 16:23
King Fook sources products worldwide and invites VIPs to the shop to try them on. Photo: King Fook/Facebook

People from all walks of life are being affected by the ongoing unrest in Hong Kong. But King Fook Holdings (00280.HK) has managed to buck the trend.

Founded by the late Young Chi-wan in 1948, King Fook always positions itself as a top-end jewelry and watch retailer. Most of its products carry a six-digit price tag.

Currently, the firm has only six stores in Hong Kong.

King Fook posted annual sales revenue of HK$550 million in the fiscal year ended March 31, and each store posted a same-store sales growth of around 11 percent.

The retailer said its business was only slightly affected by the turmoil in the past three months. It also said it has no plans to shed staff. On the contrary, it would stick to its expansion plans, including opening one more store in Tsim Sha Tsui in November.

King Fook targets high-end clients billionaires and high-net-worth professionals such as lawyers and doctors, who are barely affected by the economic impact of the unrest.

The jeweler tries to serve them well by understanding their preferences and sourcing the right products for them globally. It relies heavily on repeat customers, which is why it seeks to maintain a long-term relationship with its clients.

Lots of Hong Kong retailers have reaped huge profits since the launch of the Individual Visit Scheme in 2003. Business had been so good that they didn’t even bother to upgrade their services.

The current upheaval and the consequent plunge in visitor numbers should serve as a wake-up call for these retailers, reminding them that those days of easy money are gone.

In fact, even without the protests, China will gradually cut its import tariffs and there will be more duty-free shops across the country, eventually taking business away from Hong Kong.

King Fook’s approach may not fit all retailers. But in order to survive in the game, retailers must upgrade and customize their services. That's the only way to win and retain customers.

This article appeared in the Hong Kong Economic Journal on Sept 9

Translation by Julie Zhu 

[Chinese version 中文版]

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Hong Kong Economic Journal columnist