Luxury goods losing their shine

After years of steady growth thanks to strong demand from deep-pocketed mainland tourists, jewellery shops should brace for tougher times, with sales growth in luxury goods including jewellery and watches slowing for a seventh straight month.

Local retail sales jumped 23.4 per cent year on year to HK$43.05 billion in December, bringing the total for last year to a record HK$405.7 billion, up 24.8 per cent on 2010.

Sales of jewellery and watches, which made up nearly a quarter of sales in terms of value, jumped 46.6 per cent in value and 32.1 per cent in volume last year. But on a monthly basis, growth in the sector has fallen from 61.3 per cent year-on-year growth in May in terms of value to just 29.2 per cent in December.

Since August the luxury goods sector has reported a fall in sales of big ticket items - such as multi-carat diamond rings and watches that cost millions of dollars - although this has been partly offset by ballooning sales in medium- and lower-priced items, backed by a growing number of mainland tourists.

According to the Census and Statistics Department, year-on-year growth in sales volume of jewellery and watches fell from 46.2 per cent in May to 15.9 per cent in December.

Caroline Mak Shui-king, chairwoman of the Hong Kong Retail Management Association, said low- and medium-priced jewellery might not be selling as strongly as before. 'Recently we saw slackening growth in the number of mainland tourists - and we haven't seen that in a very long time,' she said.