Hong Kong Retail to Reshuffle as Sales Remain Lackluster
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Hong Kong retailers are far from optimistic about sales during next month’s Lunar New Year holiday as retail sales fell for nine months in a row, with a 7.8 percent plunge last November compared to a year ago.
At the same time, the tourism industry and retail sectors have been adjusting their strategies in the hope of finding a way forward.
The year-end period is the traditional high season for retailers, however, the latest government data shows that in November last year, sales in most categories recorded a significant drop, with jewelry, watches and clocks, as well as high value gifts continuing to be the hardest to hit.
This is in line with sluggish inbound tourism, which dipped by 10.4 percent over the same period.
Hong Kong’s wholesale and retail lawmaker Vincent Fang believes it’s bound to affect employment and the retail landscape.
“For example, is it possible that I just hire three salespersons instead of four? For chain stores, if the lease expires, and I cannot afford to keep five or six shops, maybe I’ll close one down.”
Hong Kong Retail Management Association chairman Thomson Cheng is estimating a single-digit percentage sales drop during the coming Lunar New Year holiday.
“If people in Hong Kong ask for two days off, they’ll have a nine-day holiday, I think they’ll travel overseas. So local consumption won’t be ideal. At the same time, The Hong Kong dollar remains strong, which also makes the price unattractive to tourists.”
“This is in line with sluggish inbound tourism, which dipped by 10.4 percent over the same period.”
A total of 10 million Hong Kong dollars have been allocated to ten local attractions to help promote them to overseas markets during winter period, but according to tourism lawmaker Yiu Si wing, the measure is not proving effective.
“The Retail sector has been through a hard time. Tourists from the mainland are selective when consuming, they have a smaller appetite for luxury goods, as well as high-end restaurants. The government is hoping to attract tourists with higher spending capability to fill the gap, but it seems that it is failing to achieve the desired results. ”
But it is not all bad news. Skyrocketing rents in Hong Kong are declining following disappointing retail performance, which is enabling some stores to expand their network. Digital products and home appliance provider Hong Kong Suning Commerce Groups is one of them. Kim Li is the Operations Director of the company.
“We have entered the retail winter, but property owners also realize that they cannot keep the current rent based on how many customers we receive. So they reduce rents significantly, some drop by 40 percent. We think we still have opportunity to develop and expand our market with lower costs.”
To better protect tourists’ interest, Hong Kong’s Travel Industry Council has asked operators to take tour groups only to the pre-registered shops, but industry practitioners are not cooperating and some say they’ll boycott the list.
For CRI, this is Li Jing in Hong Kong.
Questions & Answers
Q.What specifically caused the decline in retail sales in November and which categories were most affected?
What specifically caused the decline in retail sales in November and which categories were most affected?
Sales plunged by 7.8 percent in November compared to the previous year, with jewellery, watches, clocks, and high-value gifts experiencing the most significant drops. This aligns with a 10.4 percent dip in inbound tourism over the same period.
Q.Why does Thomson Cheng, chairman of the Hong Kong Retail Management Association, predict a further sales drop during Lunar New Year?
Why does Thomson Cheng, chairman of the Hong Kong Retail Management Association, predict a further sales drop during Lunar New Year?
He believes many Hong Kong residents will travel overseas, reducing local consumption. Also, the strong Hong Kong dollar makes prices less attractive to tourists, impacting potential sales during the holiday.
Q.How are declining rents affecting some retailers in Hong Kong?
How are declining rents affecting some retailers in Hong Kong?
Skyrocketing rents are now falling due to poor retail performance. This creates opportunities for some stores, like Hong Kong Suning Commerce Groups, to expand their network and develop their market at lower operating costs.
Q.What is the government doing to attract more tourists, and is it proving effective?
What is the government doing to attract more tourists, and is it proving effective?
The government allocated 10 million Hong Kong dollars to promote ten local attractions to overseas markets. However, tourism lawmaker Yiu Si wing indicates this measure is not proving effective in attracting tourists with higher spending capabilities.
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