Old luxury handbags get new life in Hong Kong
HONG KONG: Byron Yiu once eked out a living by hawking sunglasses at a Hong Kong street stall, but has made his fortune by turning traditional shopping habits around and re-selling rich women’s luxury handbags.
Yiu’s Milan Station retail chain, the first of its kind in the fashion conscious city, buys trendy bags – luxury tote or shoulder bags to evening clutch – from the ladies who lunch in Hong Kong’s upscale neighbourhoods.
Locally known as “tai tais”, the small and often thrifty demographic, rarely seen without Prada, Chanel or Gucci on their arm, provides the retailer with a steady flow of bags which are later authenticated by Yiu’s team.
“Hong Kong ladies are smart and money savvy. Unlike jewellery, the value of handbags will depreciate when they are no longer trendy,” said Yiu.
“It has become a culture in Hong Kong, the ladies will sell the old bag when they get a new one. We are depending on this very small group of “tai tais” to sell us the handbags they want to get rid of, and they are the main supply source to other ladies”.
The idea not only turned traditional shopping habits on their ear and made Yiu a rich man himself, but the company set a record for the most popular initial public offering in the Asian financial hub’s history earlier this year.
Investors were abuzz with excitement when the firm, little known outside Hong Kong, went to market in May with an initial public offering oversubscribed a whopping 2,180 times.
The share sale smashed a 2006 record and outshone high-end handbag maker Prada, which made its own lacklustre Hong Kong debut around the same time.
“We thought we would do well but it was beyond our expectations that the response was so overwhelming,” said Yiu, surrounded by bags sporting names including Louis Vuitton, Chanel, and Hermes.
From a humble start-up a decade ago with a 100-square-foot (9-square-metre) shop, the pioneering retailer now has 14 outlets, with an eye to further expanding to meet mainland China’s booming demand for luxury goods.
While most customers hope for a big discount, sometimes as much as 30 per cent off a bag’s retail price, certain limited edition bags are actually pricier as used collector items, such as the prized Hermes Birkin.
“Ten years ago, there was no such business. People would buy, use and keep the bags at home. When they are no longer trendy, they became trash,” said Yiu. “We became popular very quick,” added the 42-year-old.
The company said its share of the proceeds from the float, which saw about 25 per cent of the firm sold off for a total of HK$271 million ($35 million), will help it launch 24 new stores in several Chinese cities over three years.
The retailer currently has two stores in Beijing and one each in Shanghai and Macau, a gambling hub about an hour by ferry from Hong Kong, with planned new locations including the booming interior metropolis of Chengdu and the southern city of Guangzhou.
“China is like an unexplored oil field,” said Yiu, smiling confidently. “The market is huge, and they have a culture of gift-giving. Some people may not necessarily like the handbags they received so they prefer to trade in the handbags for hard cash.”
China is expected to become the world’s largest luxury goods market by 2020, accounting for a whopping 44 per cent of worldwide sales, according to a report by brokerage firm CLSA Asia-Pacific Markets.
Yiu said Milan Station is also aiming to tap the European and US markets with an online sales strategy that would see bags traded on auction giant eBay.
“These are places where we don’t have plan to open stores in the short term so this is our new strategy, and it is a way for us to test the waters online,” he said.
And while few industries are recession proof, Yiu said the current stock market turmoil and uncertainty about the global economy may not be such bad things for the retailer.
“When the economy is not good, people are selling more bags and we actually get some very rare items during the economic hard times,” he said.
“We are like the Hong Kong Stock Exchange – people come in, buy and sell their bags. People would still want to buy the hottest item,” he said.