Food
Department store Sogo expects a gloomy year ahead due to a strong Hong Kong dollar and weak mainland tourists numbers. Its iconic Causeway Bay outlet recorded a 4.5 per cent year-on-year drop in sales, according to figures released yesterday.
To survive in the increasingly tough local economy, the shop’s operator Lifestyle International is considering extending its twice-yearly sale weeks, which traditionally see customers cramming into the stores to hunt for bargains.
“2015 was not too bad, but 2016 will be very challenging,” chief financial officer Terry Poon Fuk-chuen told reporters at the company’s annual results meeting yesterday.
He pointed out that the Hong Kong dollar is strong, since it is pegged to the rising greenback, and it is having a dire effect on the already battered retail sector, which has been suffering from a shortage of mainland shoppers.
The average daily customer traffic in the Causeway Bay branch dropped 2.4 per cent to 81,700 people last year and average sales per ticket shrank 3.1 per cent to HK$850 from the previous year.
Chief executive Thomas Lau Luen-hung expects a flat year ahead, after sales at the island outlet experienced a double-digit decline over the past two months, compared with the same period last year.
“I am not sure when the retail market will bottom out, but the chances are slim for a short-term rebound,” said Lau.
The total number of visitors to Hong Kong declined 2.5 per cent last year – the first drop since 2004 – and mainland tourist numbers dipped 3.0 per cent.
However, Lau is confident the long-term outlook of Hong Kong’s retail market is positive, as he believes the city is still an attractive place for mainland tourists, thanks to the expanding middle class and ongoing economic reforms north of the border.
Despite more discounts being offered to customers in a period of weak consumer sentiment, Sogo has been luring in younger customers in a shift away from the previous focus on tourist promotions.
Lau said shoppers have become younger and they prefer individuality to brand names when choosing what to buy.
To adapt to this trend, more emerging international brands have been added to the first and second floors at the Causeway Bay shop over the past year, Lau said.
