Cheap at half the price
The market downturn means bargains galore for Hong Kong's shoppers but many
The demolition of the old Hilton Hotel in Central three years ago marked the end of the 20-year-old jewellery business Helen Ng Ying Yuk-lin and her husband operated, and signalled the beginning of their early retirement.
But two years into their life of leisure, the couple became bored. So, at the urging of a nephew in the fashion retail business, they agreed that opening a women's boutique was a worthy enterprise into which to channel their energy.
'We saw it as a nice role to play and we thought it was a smart move,' Ms Ng said. Now, seven months later, the Trio Boutique at Plaza Hollywood has still not broken even as the couple had anticipated. Worse, she says, they are strapped to a three-year lease that will sink the business deeper into debt.
'Business is terrible. My husband doesn't even come in any more. He's given up,' the 53-year-old says, with a slight edge of anxiety.
'Other malls have businesses around them and office workers. We just have housing estates. People who come to shop are housewives who don't have as high a salary as office workers do.' The opening of Plaza Hollywood in Diamond Hill last summer now appears ill-timed. Both independent and established retailers had barely settled in before they were hit by the retail slump.
Some people are counting on Galaxia, a newly built five-tower housing estate built behind the plaza to feed a constant stream of customers. A massive exhibition of the Wheelock & Co development in the plaza attempts to draw buyers, as do advertisements in store windows.
'Business is not so good now, but when people start moving into the new complex, maybe things will pick up,' said Wong Yuk-lan, a salesperson for handbag store Fion.
The mall, as expected, carries a 'Hollywood theme' only detectable in pockets of the complex. Riding down one set of escalators, cultural icons such as Marilyn Monroe and James Dean gaze upon shoppers. At another set, photographs of local film figures from the 1960s to the present are displayed. From here, shoppers can gaze out of the window on a sprawling shantytown that will make way for the high-rises.
Post-Christmas sale signs announce discounts of 10 to 80 per cent in many shops - most are 70 per cent.
'If we didn't discount, people would not buy,' said Ben Ng Kwok-keung, supervisor of the Watches Watch store, echoing a widespread sentiment. The shop appears more discreet than others in announcing its bargains, cutting 10 per cent off some of the watches and clocks priced from $400 to $2,000.
'Even the brand-name shops are half-price so it doesn't matter how low my prices go down. [Shoppers] will go to The Landmark or Pacific Place instead, where they can get 50 per cent off,' Helen Ng says.
Customers who have not defected to upmarket retailers have remained shameless in their pursuit of a good bargain, according to other retailers.
Vincky Lam Si-iam, shop manager at Dome, a small clothing store whose goods cost between $100 and $500, was appalled by recent requests.
'It's normal for them to bargain even though we have fixed prices. But we've sales on now. Our range is between $50 and $290 and people are still trying to bargain. It's ridiculous.' Macy Cosmetic Company carries cheaper perfumes such as eau de toilettes ranging from $85 to $600 'because few people are looking for perfume concentrates', according to shop manager Mei Sy Chow Mei-sim.
Ms Sy, like the others, was disappointed with buying patterns during the holidays.
'Everyone bought items for less than $100,' she said.
Meanwhile, at Pacific Place, sale signs displayed on ground-floor shops are obvious but become more discreet as you ride the escalators to the top floor filled with upmarket boutiques.
Some retailers here blame a warm winter for adding to their problems.
'Who wants to buy a cheap winter coat when it's so warm? They won't. If it was cold, they would think they need one,' said Jenny Tang Oi-li, manager of women's clothing store Momento, on the second floor.
Although one rack of coats was on display, she said she stored some away to make room for practical items that suited the climate.
'It used to be easy to make a few thousand dollars in one afternoon, and a few thousand at lunch time, but not anymore,' she said.
'It used to be that even if people did not have a lot of money, they would still buy as long as the general mood in Hong Kong was good. But everyone now has friends who say they aren't going to buy so they'll stop buying too,' Ms Tang says.
Carmen Lau Lai-yung, one of two staff working at the upmarket skincare shop La Prairie, also on the second floor, said winter was supposed to be the more profitable season because of the drier weather. But the store in Pacific Place has lost 15 per cent of its business because of the drop in Japanese tourists.
'We've the two hotels nearby, though, so we still have other tourists come by,' she said, rubbing cream on her hands and arms.
Selected non-fashion stores remain unaffected by the gloom pervading the retail sector. Royal Doulton, known for its expensive tableware and figurines, is opening its second store at Ocean Terminal in March while some clothing retailers are closing or backtracking on plans to open more outlets.
'Our customer base is mainly locals, not tourists,' says John de Bono, Royal Doulton's sales director for the region.
'We've a client list that's basically the Who's Who of Hong Kong. We've carved ourselves a niche so a drop in tourists doesn't affect us as badly.' The strategy seems to have worked: walk-in customers account for 15 per cent of business. Five years ago, they accounted for 40 per cent. Mr de Bono said corporate clients - who buy products as gifts for employees or clients and for their own use in boardrooms and offices - and regular VIP customers make up the rest of the clients.
When it came to wedding gift-giving, local customers never scrimped, he said. While it was accepted practice to give a teacup-and-saucer set in Britain, local culture pressured guests into buying entire dinner sets.
'Sometimes, we only need one customer to spend $50,000 on a dinner set and that will be good enough [for the day].' Large fashion retailers with interests other than in Asia have reportedly said they are suffering less because of their business interests elsewhere. In December, the executive director of Esprit Holdings, Surinder Chhibber, said the group would be affected by regional financial turmoil but expected to be cushioned by its European wholesale and retail operations.
Regarding the impact of the economic slump on business, he said: 'It won't be alarming.' Terry Ng Sze-yuen, executive director for Giordano Holdings International, said Christmas sales in Hong Kong dropped 20 per cent, compared to last year while shops supported mainly by tourists saw sales drop 50 per cent. There would be little respite for the next two years, but the group was still going ahead with opening a shop in Vietnam later this month, he said.
'I haven't closed any shops [in Hong Kong] because of tenancy agreements but I have been doing a lot of talking with the landlords to reduce the rents,' Mr Ng said.
'It's the overheads in Hong Kong that are costing too much. At the end of the day, if they are not willing to do this, we'll suffer because we are all in the same boat.' He said negotiating with landlords was an 'uphill battle' because they were adopting a wait-and-see attitude. Landlords must 'face reality and reduce rents' if Hong Kong was to stay competitive, he added.
'I truly expect after Chinese New Year, there will be more and more shops available. There are individual shops that will shut down and disappear.' Back at Trio Boutique, Ms Ng sits in front of shelves stacked with discounted sweaters. She, too, says she hopes the mall management will reduce the rent.
'And I hope when we finish this lease, business will be better,' she said. 'I don't want to retire again. The last time I retired, I was bored, I put on weight, I dressed terribly and I looked awful.'