Growth in HK retail sales weaker than expected
Hong Kong retailers are heading for turbulence as the year-on-year growth in retail sales unexpectedly weakened to 15 per cent in January from 23.5 per cent in December.
January's sales, estimated at HK$43.2 billion, came in below the forecast for the month from the Hong Kong Retail Management Association, and the decline comes as retailers rental costs and payrolls are on the rise.
The trade body expected sales for the month to be more than 20 per cent up on the same month last year, helped by higher spending in the lead-up to Lunar New Year and the government scheme under which HK$6,000 will be given to each holder of a valid Permanent Identity Card aged 18 or above on March 31.
The disappointing sales figures were not confined to jewellers and watch retailers, who suffered their eighth successive monthly drop in sales growth in January. Sales growth was also down in the furniture, automobile and footwear sectors.
The softening in the property market as well as lay-offs in the banking and financial sectors over the past few months accounted for slower sales of furniture and cars, said Caroline Mak Shui-king, chairman of the Retail Management Association.
'To my surprise, footwear sales did not increase but dropped in the lead-up to CNY, as Chinese are not supposed to buy shoes after then,' Mak said.
In a poll conducted by the retail trade body of 42 retail companies responsible for operating 2,200 shops in the city, 60 per cent of respondents said they expected growth in sales this year, while 28 per cent anticipated a drop in sales.
The negative outlook was seen in responses from fast food shops, department stores, electronic goods outlets, and furniture stores.
'Meanwhile skyrocketing rental costs and the implementation of minimum wages have weighed on the retail industry,' Mak said. In this environment there would be widespread shop closures throughout the city if sales growth was to fall below ten per cent, she warned.
The January results were, however, distorted by the difference in the timing of the Lunar New Year, which fell in late January this year versus early February last year.
'It would be more meaningful to analyse the retail sales figures for January and February combined for a clearer picture of the underlying trend,' a government spokesman said yesterday.
Supermarkets and outlets selling electrical goods and photographic equipment were the exceptions to the poor sales performance in the sector in January, thanks to growth in tourist arrivals during the month.
Visitor arrivals in January reached 4.14 million, a 15.1 per cent year-on-year increase. The Tourism Board said on Wednesday the growth was mainly led by the increased traffic from the mainland during the Lunar New Year holiday.
More than 3.1 million visitors arrived from the mainland, up 23.9 per cent on arrivals in January of last year. Of these, 69.5 per cent, or more than 2.15 million, travelled under the Individual Visit Scheme, up 24.5 per cent from the same time last year.
The number of visitors to the city from the mainland in January, a 23.9 per cent increase on the year before