Slowdown brings early start to sales
As Hong Kong's retail industry slows down, some local retailers are offering early discounts and putting out lower-priced products to deal with the challenging market.
The summer sale has started a bit earlier than usual for a number of fashion retailers, who are keen to clear inventories.
Local casualwear chain Giordano and Giordano Junior held a staff sale between June 22 and 25, offering a 50 per cent discount in almost all its shops in the city.
Its main rival Bossini also offered a discount of 30 per cent in a staff sale from June 21 to 24.
Staff sales are open for company employees, their families and friends, but they are usually offered by retailers ahead of big public sales and thus seen as a precursor to the coming pricing trend.
Other brands - including Adidas, Gap and I.T - are offering various discounts, selling their wares much cheaper than the regular prices.
'There's a clear sign of slowdown in Hong Kong's retail industry. And the clothing and footwear segments are two of the most affected areas,' said Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king.
Retail sales growth in the city fell to 8.8 per cent in May, the lowest in more than two years, dragging down total retail growth for the first five months to 13.5 per cent, according to official data. Last year, the city's retail sales jumped 25 per cent from 2010.
Maureen Fung Sau-yim, a general manager in the leasing department at Sun Hung Kai Properties, said mainland shoppers had recently been spending less on expensive watches and jewellery. 'Many watch and jewellery shops have packed away their million-dollar products and are displaying more items priced under HK$500,000 in shop windows and counters. They have also introduced new brands from Europe and offered more limited-edition products to attract mainland buyers,' she said.
Fung, who is in charge of 34 shopping malls in Hong Kong and two in Shanghai, said mainlanders were increasingly choosing to go to Europe to shop because of the weak euro.
'Gone are the days of mainland visitors flocking to Hong Kong to shop,' she said. 'Now we must rely on our customer service, nice restaurants, entertainment facilities and comfortable shopping environments to attract them.'
Another important way to entice shoppers from across the border, she said, was to increase online promotions - for example, sharing information on bargains over social media platforms such as Weibo.
Mak said Hong Kong retailers had for years been used to fast growth and aggressive expansion backed by strong demand from mainlanders. But problems like exorbitant rents, less competitive product pricing, escalating hotel room rates and poor customer service may hurt the city's position as a shopping destination.
Shares in Bossini and I.T have lost 17 per cent and 22 per cent, respectively, this year, while Giordano International gained 4 per cent. The Hang Seng Index has risen nearly 5 per cent in that time.