When British activewear brand Sweaty Betty opened its first store in Hong Kong in October 2019 – a small boutique in the upscale IFC Mall – the city’s retail industry was in the early stages of what would become one of its worst slumps in history.
Following months of anti-government protests that caused frequent temporary store closures, especially on weekends, and a plunge in arrivals of high-spending visitors from China, Hong Kong’s retail scene had by then been severely impacted.
The start of the coronavirus pandemic in early 2020 and the ensuing global economic downturn that shows no signs of abating have dealt yet another blow to the city’s formerly thriving retail sector.
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Since then, luxury labels such as Prada, Valentino and Chloe, and high-street brands such as Victoria’s Secret and Gap have shut stores in the city or left Hong Kong altogether.
You would have been forgiven for thinking that the launch of a new brand in Hong Kong at such a difficult time would be doomed to fail.
Barely a year after its first foray into the Hong Kong market, however, Sweaty Betty has expanded its retail footprint with two more shops: one in Fashion Walk, in the prime shopping district of Causeway Bay, and the other in the K11 Musea mall on the Kowloon waterfront.
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Sweaty Betty is not the only international brand that has increased its presence in Hong Kong in recent months. Decathlon, the French sporting goods retailer that already operates a store in Causeway Bay, has just unveiled two new stores in Hong Kong: one in Central district, in a space that formerly housed the flagship of leather-goods brand MCM, and the other in Kowloon Bay.
Lululemon, the Canadian performance wear brand known for selling upmarket workout gear, opened a store in Hong Kong’s largest mall, Harbour City, at the height of the pandemic, celebrating with a collection of very decadent Swarovski-embellished leggings that cost HK$6,588 (US$850) a pair.
It’s hard not to notice that all three companies are in the fitness industry, and their growth reflects a global trend: amid one of the worst health and economic crises in recent history, fitness and wellness are booming.
Sportswear giants like Nike have been weathering the pandemic better than most international apparel and footwear brands. “We’re getting stronger in the places that matter most,” said Nike CEO John Donahoe on a recent conference call. “We can thrive in this environment.”
The company reported 83 per cent growth in its digital business during the first three months of its financial year and almost 200 per cent growth in demand for the Nike App, which saw triple-digit growth in monthly active users, as people have worked out from home because of gym closures and fears about catching the virus in public places.
Tech giant Apple recently introduced the Apple Watch Series 6, which features wellness and fitness capabilities such as a blood oxygen sensor, while home exercise equipment firm Peloton has been one of the few success stories during the pandemic in the United States.
Marc Zielinski, the CEO of Decathlon in Hong Kong, says its Hong Kong customers have always been very receptive to its range of affordable products available online and at its first store in the city, and that the pandemic provided the right opportunity to expand.
“There was already an emerging trend in the fitness industry also before Covid-19,” says Zielinski. “Covid was an accelerator in a way, but things were already going into that direction, both in Hong Kong and beyond.”
At Lululemon, Keen Yim, vice-president of brand and community, Asia-Pacific, says: “For the Asia-Pacific region, Lululemon has seen growth in three main areas.”
“Firstly, as many people were under some form of lockdown and mostly at home, we saw a rise in (sales of) activewear and home equipment, especially yoga mats.
“Secondly, we saw growth in our athleisure wear. As people were working from home, they wanted to dress comfortably, but needed to still look respectable for conference calls. From there, as people started to go back to the office, we noticed that they changed their daily work style to include that at-home-comfort level.
“Thirdly, as people wanted to get out of the house but avoid crowds, it directed many to reconnect with nature. This saw the outdoors, whether on a mountain or the beach, as the new social-gathering hotspot. This also contributed to growth in both our activewear and athleisure categories.”
Zielinski says that in the summer, Decathlon saw a rise in sales of equipment for sports such as kayaking and stand-up paddleboarding, and that camping gear has also been popular as people unable to travel have switched to exploring Hong Kong’s country parks and beaches.
With stores closed or their operating hours reduced, engaging with customers online has been a priority for fitness brands trying to stay connected with their followers. Lululemon is known for having built a loyal community thanks to its in-store and online classes, a practice that has become even more popular among fitness enthusiasts during the pandemic, Yim says.
Sweaty Betty, known for its yoga wear, has been offering free online yoga classes during the pandemic, which has helped it increase its following in Hong Kong.
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“Hong Kong consumers have welcomed Sweaty Betty with open arms,” says Ariane Zagury, founder of Rue Madame, the company that launched Sweaty Betty in Hong Kong.
“We have a strong sense of community and having more stores allows us to reach out to some local communities, studios and people to support the grass-roots development of the brand. Also, athleisure has become a key category. You can’t walk down any street without seeing leggings paired up with a tee, not only to go to the gym, but also to meet a friend for a coffee, lunch or a drink.”
The coronavirus pandemic has certainly been the catalyst for an increased focus on health and fitness around the world, but in Hong Kong the shift from luxury and beauty retailers, which tend to target tourists, especially those from China, to categories such as fitness, aimed at local shoppers, is symptomatic of a bigger change in the city’s retail landscape.
Both Sweaty Betty and Decathlon were able to take advantage of more favourable lease terms when planning their expansions in Hong Kong, something that would have been unthinkable even a year ago, when the city’s notoriously unflinching commercial landlords would have balked at the idea of making concessions to new tenants.
Zielinski recounts that when he first came to Hong Kong 20 years ago with the aim of opening a store in the city, high rents kept the company from entering the market (Decathlon has 300 stores in China alone and has had a presence there as well as in Singapore, the Philippines and Indonesia long before first coming to Hong Kong in 2017).
“Even three years ago when we opened the Causeway Bay store I realised that this wasn’t sustainable and now the problem seems to have been fixed and solved in a way. It’s a good change for Hong Kong,” says Zielinski.
“We wouldn’t have been able to afford this (Central) location before and I think that landlords are realising that they need to change their way of working and rely on brands that address the local community.
“We obviously suffered from the protests and Covid-19, but when people came back and wanted to exercise they came to Decathlon, so we were happy to have something to offer.
“We like the idea that sports can provide health and well-being, which is why making sports affordable is very important to us and the idea of being where people need us.”
As more malls and shopping districts in Hong Kong rethink their purpose and their target audience, it’s likely that fitness and health will take centre stage in their new plans, which bodes well for a retail scene that had for years relied too heavily on the volatile inbound travel sector while neglecting its local customers.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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