Lunar New Year shoppers show frugal streak, but there are early signs of a return by mainlanders
Jeweller Chow Tai Fook sees 11pc drop in sales, while Sa Sa’s rise 3.5pc. But more shoppers arriving in the city from lower-tier Chinese cities
Hong Kong’s Lunar New Year shopping season has turned out to be a tale of two types of retailer, as mainland tourists snapped up unostentatious lipsticks and eyeliners in their droves, while avoiding expensive watches and other luxury items.
The city’s consumers appeared to have been considerably more frugal during the recent annual break, judging by an 11 per cent slump in sales in Hong Kong and Macau by Chow Tai Fook, the world’s largest jeweller run by one of Asia’s richest families, during the Year of the Rooster holiday period, running from mid-January to early February.
In stark contrast, Hong Kong’s largest cosmetics chain Sa Sa International booked a 3.5 per cent sales rise in the city and its former Portuguese colony neighbour over the same period.
“We witnessed a rise in foot traffic from mainland shoppers, and the number of transactions they contributed increased 10.7 per cent,” Sa Sa said in a filing to the Hong Kong Stock Exchange.
After years of being considered a shopping heaven by mainland holidaymakers, Hong Kong’s retailers have been thumped hard by plunging sales since 2014, amid the triple whammy of Beijing’s extravagance clampdown, China’s faltering economy, as well as escalating tensions over mainland shoppers.
Last year’s retail spending in Hong Kong plummeted to a 17-year-low of HK$436.6 billion, down 8 per cent versus 2015, with a slew of high-profile store closures including by Forever 21, Abercrombie & Fitch and Prada.
But there was at least one silver lining. The recent return of mainland buyers to Sa Sa, whose lipsticks, facial masks and other beauty products normally sell for modest prices of below 500 dollars, coincided with signs that tourist arrivals are increasing from outside the most prosperous parts of China.
Official data showed that December’s year-on-year sales decline narrowed compared with previous months, underlining a mild revival in tourist arrivals that month.
While residents of Shanghai, Beijing and Guangzhou tended to venture farther afield to Europe and Japan for their Lunar New Year holidays, those from less-developed Chinese hinterlands now appear to be considering Hong Kong as an exotic cosmopolitan centre and a must-visit destination.
Hong Kong Tourism Board figures indicate the average per capita spending of mainland visitors has been sliding since 2014.
The evolving demographics, analysts say, could mean travellers on lower incomes have become less inclined to splurge, as their wealthier predecessors did on opulent items such as Hermes handbags and Rolex gold watches, opting for affordable bargains instead.
“In recent months, the decline in mainland visitor arrivals and retail sales has been narrowing,” said Denis Ma, head of research for JLL in Hong Kong.
“While improving sales have historically led to rising rents, luxury brands are likely to be visibly absent in the upcoming recovery.”