Consumption survey hints at recovery
Spending sentiment is at last showing signs of recovery, with more consumers planning to increase their expenditure, according to a survey.
The Hong Kong Retail Management Association (HKRMA) said its latest quarterly study showed that the number of consumers who would increase overall spending in the next three months had risen five percentage points from the previous quarter to 21 per cent.
It is the first time in six months an improvement has been noted.
The number of consumers who planned to spend less had dropped two percentage points to 18 per cent, while those who said they would spend the same remained unchanged at 61 per cent.
The association represents more than 500 retail chains covering more than 5,000 outlets and employing two-thirds of Hong Kong's retail workforce.
Association chairman Yu Pang-chun said the survey indicated consumer confidence was beginning to show signs of recovery. 'But consumers are still very cautious and the positive impact has not yet been felt by the retail market,' he said.
Members had reported a 30 per cent fall in business during the World Cup, as the tournament had kept regular shoppers away.
'The World Cup is being played in an Asian time zone which has seen crowds of people stuck to the television,' he said.
Most of the games had been played during the afternoon and early evening, considered a peak shopping period.
Mr Yu said the outlook for non-food retailers remained bleak despite the survey findings.
He said the results only reflected consumer expectations, pointing out that whether they would actually increase their spending still depended on how the economy performed.
The improvement in spending sentiment since early this year coincides with increased activity in the property and stock markets.
Jimmy Chan Kui-tim, chairman of shoe retailer Le Saunda Holdings, said consumers had lost the shopping bug - unless retailers offered big price cuts.
'Big sales have become consumers' wishful thinking during the depressed economy,' he said.
Le Saunda has 26 outlets in Hong Kong.
Mr Chan said, however, that retailers would be the ultimate victims if they continued cutting prices. 'We have to adopt different strategies to stimulate buying interest instead of just slashing prices,' he said.
For instance, his company needed to design more shoes or provide discounts for purchases of two pairs of shoes instead of just one.
The survey suggested spending sentiment had improved slightly across most product categories.
Children's products and food categories showed the biggest improvement, while audio visual products, electronics, computers and luxury goods remained fairly stable.
Grocery shopping, dining out and entertainment took up the largest part of consumers' incomes, accounting for 39 per cent, the survey found.
This was followed by 16 per cent for rent/accommodation, 15 per cent on investments/savings and the same on shopping (excluding groceries).
Of those surveyed, 25 per cent believed the economy would improve in the next three months, up from 15 per cent previously.