People crowd in Milan Station on a recent Saturday afternoon, shopping for designer handbags. Occasionally a customer takes one off the shelf, hanging it on her shoulder or tucking it under her arm, trying it on for size.

The Gucci, Louis Vuitton and Chanel handbags sport price tags of $200 and more, but most are pre-owned, so retail less than original sale prices.

Yu Chan shops frequently at the Milan Station in Causeway Bay. She says she and her friends are buying discount luxury goods, in response to the economic downturn. 

"Because, if for the same price you can get, I mean if for a more attractive price, you can get the same quality, why not?," said Yu.
Luxury retailers are featured Hong Kong's main shopping districts. The city does not tax luxury items, such as jewelry, clothes and leather goods. For decades it has drawn tourists from around Asia looking for bargains.

Yet, the local economy is in recession for the first time in five years. Full-price shops are seeing flat or contracted sales. But some retail outlets that offer discount or gently-owned luxury goods are seeing an increase in business.