Shops slash prices by up to 90pc as traders extend sale season in face of downturn
Beleaguered retailers are so desperate to hear their cash registers ring that they are discounting new stock by up to 90 per cent and starting clearance sales six weeks earlier than usual.
Experts say the cuts are a record for Hong Kong stores, which are feeling the effects of the global economic downturn.
Shops have become a bargain hunters' paradise as the ailing economy bites into profit margins of retailers who are being forced to give away stock at knockdown prices to clear their shelves.
Sales, which usually begin in July, are now starting as early as May with prices of clothing, jewellery and luxury goods reduced the most.
The timing of this season's sales coupled with heavy discounting of new stock had set a record in the territory's retailing history, property consultant and Sheraton Valuers managing director Michael Chik Pa-fai said.
'Usually retailers will only use large discounts such as 80 per cent off to get rid of old stock,' Mr Chik said. 'But this year they are selling new products of the summer season at a discount rate. They are not even old products. It's just terrible.'
It was also becoming more common for shops to offer specials such as 'buy one, get one free', Mr Chik said, adding that it was not just the economic downturn but heavy rain in the past two months that had wreaked havoc on retail profits by keeping shoppers away.
Retail Management Association chairman Yu Pang-chun said the discount rate was 'more aggressive' than last year.
'This year you see many shops displaying signs saying 80-90 per cent off,' Mr Yu said. 'Last year it was 40-50 per cent and only very occasionally 60-70 per cent.'
The sales were a by-product of the weak retail market and economy which had affected the sale of goods across the board, especially clothing, he said.
'Logically, people will buy if they need something regardless of whether shops are discounting, but retailers are not game enough to [rely only on this],' he said.
Mr Yu said they were forced into a sales spiral, with no choice but to slash prices because everyone else was doing so. 'If there are two shops next to each other and if one has a discount and the other doesn't . . the customer will go to the shop with the sale.'
He said the heavy discounts had boosted the total volume of retail sales by two per cent - seasonally adjusted - in the first half of the year.
Jewellery, watches and clocks and valuable gifts suffered the largest price fall from January to June of 6.2 per cent, followed by a 2.8 per cent fall in clothing and footwear.
