Abstract

Milan Station Holdings Limited (“Milan Station” or the “Group”) was a Hong Kong based retailer of unused and second-hand luxury branded handbags. The company ran a total of 17 stores—11 in Hong Kong, three in Beijing, two in Shanghai and one in Macau. With plans to open 24 new stores in the coming year, the chief marketing officer of the Group, was brainstorming on how to sustain the Group’s growth momentum. The company was facing some severe headwinds. Surging rents and rising salaries in Hong Kong threatened to squeeze profit margins. Worsening consumer sentiment in both Hong Kong and mainland China could put further pressure on the Group’s sales and profits.

Learning Objectives

After discussion and analysis of the case, students will be able to:
Understand the challenges China’s regulatory system poses on the opening of brick-and-mortar stores.
Understand how taxes, especially in the luxury good sector, can influence positioning and strategy.
Understand the various non-financial barriers to growth.
Develop a strategy for expanding a luxury retailer in China.