Causeway Bay, a popular shopping district in Hong Kong
SAHACHATZ / Shutterstock.com
Retail sales in Hong Kong continued their downward trend in October, with the jewellery category recording the steepest decline, the latest government data showed.
The Census and Statistics Department said total retail sales in October plunged 24.3 percent, the largest year-on-year drop for a single month on record, due to violent social incidents in the city that disrupted consumption sentiment and tourist arrivals.
Retail sales of jewellery, watches and clocks, and valuables were down 42.9 percent; followed by clothing, footwear and allied products, which fell 36.9 percent; and department stores, which recorded a 31.1 percent dip.
Data from the Hong Kong Tourism Board meanwhile showed a 43.7 percent drop in tourist arrivals to Hong Kong in October to 3.31 million from 5.88 million during the same period last year.
A government spokesman said ending violent protests and restoring social order are crucial to the recovery of Hong Kong's retail sector.
HK loses retail lustre
Pascal Martin, partner at international consultancy firm OC&C Strategy Consultants, said Hong Kong may no longer have the most ideal retail landscape for businesses.
“The Hong Kong market will recover as it always does. As soon as Chinese tourists are reassured about the safety and convenience of visiting Hong Kong, they will come back,” noted Martin. “However, the recent events have just accelerated a structural trend that Hong Kong is not as attractive a retail destination as it used to be.”
Supporting this trend are lower taxes and duties in China, and brands’ more harmonised global pricing structures, with smaller cost differences across markets due to the price transparency created by the internet.
Japan, Korea, France and Italy are also becoming popular shopping destinations for Chinese travellers. As such, brands that built extensive retail footprints in Hong Kong on the assumption that Chinese tourists will continue to drive their business will have to adjust their presence here, noted Martin.
“The impact of this trend will not be felt immediately, but gradually, as brands reach the renewal date of their stores, one store at a time, over the next few years. There will be adjustments in number of stores, and adjustments in rent levels,” he continued.