The retail industry in Hong Kong has not been performing as well as last year.
In Lonely Planet’s ‘Guide to Hong Kong & Macau’, Stephen Fallon describes shopping in Hong Kong as far more than a social activity, rather, he refers to it as a “serious sport”.
Famed for its retail trade, from luxury goods and designer knock-offs to electronics and food, Hong Kong saw more than 54 million people visit last year, a large proportion of which were mainland tourists.
Over the past week however, the region’s stores have been either closed or empty. The usual bargain hunters and fashion conscious shoppers have been replaced by protestors who were in such large numbers that massive shopping areas were blocked off.
The holidays known as ‘Golden Week’ are usually a very busy shopping period for trade but according to a survey commissioned by the Hong Kong Retail Management Association, major retailers saw sales fall from 15-50% compared to the same period last year. With October known as the second-biggest retail period after December for Hong Kong, it’s no surprise that the largest drop in sales came from those selling watches, jewellery, fashion and accessories.
On Friday, Prada’s shares fell as much as 4.6% – their lowest levels in over two years. No doubt they were affected by the lack of business in Hong Kong, a key area for the luxury retailer. In total, luxury brands often make 10% of their worldwide sales in the region.
It is being said, however, that the lack of tourism isn’t all down to the protests. Hong Kong’s mainland visitor growth rates and retail sales have actually been in decline for months. Sales began falling in February and decreased for six consecutive months, causing an overall 1% decline for the first eight months of 2014.
While August was better, with a modest rebound of 3.4 percent year-on-year sales growth, Hong Kong’s Retail Management Association recently lowered its sales growth projection for 2014 by 5% (to 5%) after previously predicting 12% at the beginning of the year.
Joanne Ooi, CEO of jewellery company Plukka, recently expressed that a fall in Hong Kong luxury sales is part of a long-term trend that started long before the protests and is caused by a variety of factors.
Speaking to Bloomberg, Ooi said “I think that we’re looking at a permanent downward trend anyway in the sector.”
Ooi believes that other factors pose a “greater concern” to the retail industry. Where mainland tourists made up 37% of Hong Kong’s retail and restaurant spending in 2013, purchasing habits are changing. Since the exchange rate with the sterling is looking good for Chinese tourists, they may opt to spend in the UK instead.