So, where have all the mainland spenders gone?
Apparently, the shopping sentiment in Hong Kong has changed a lot since the last holiday season.
In addition to the tragic news about the Lamma Island ferry accident, the deadliest boat accident in Hong Kong in 40 years, retailers didn’t have a great holiday season either.
Luxury shops in particular reported a slump for this “golden week”, when people on the mainland get a week off to celebrate National Day and many often travel to Hong Kong, their No. 1 shopping destination abroad.
Apparently, the shopping sentiment in Hong Kong has changed a lot since the last holiday season. Forget the long queues of consumers in front of luxury shops like Prada and Chanel on Canton Road in Tsim Sha Tsui. In the last few days, you can just walk in or wait one or two minutes to enter.
In Central, I visited the Landmark and IFC Mall, two must-go places for those who want a five-star shopping experience or chase the fashion trend. Surprise! I found no crowds no matter the time. At IFC’s Bally, the Swiss brand for luxury handbags, three salespeople were a bit surprised to see I entered the shop and swarmed over to ask what they could do for me. One of them acknowledged that it had been a very quiet day so far.
So, where are the consumers?
Video: "Shoppers in Hong Kong on October 1", by Helene Franchineau
It’s no secret that many locals have tightened their purse strings given the weak business environment in the city’s two pillar industries – finance and real estate. Hundreds of jobs have been cut at major international banks in the city so far this year, and the government is trying to curb the fast rise of property prices.
Then, how about mainland travellers? The answer is a mixed one.
In terms of numbers, you will still see a rise. Hong Kong broadcaster TVB, citing the Tourism Board’s estimates, reported earlier this week that about 900,000 mainlanders were expected to travel to Hong Kong during the "golden week", roughly a 15 per cent increase from the same period last year.
But people in the retail industry said they didn’t expect mainland travellers to contribute more than what they did around the same time last year.
Some cite economic slowdown on the mainland as one of the main reasons why now even mainland travellers -- whose images are often linked to rich spenders when they travel abroad -- are more financially conservative. Others say Hong Kong may be already losing its attractiveness for mainland travellers.
“Those who have already visited Hong Kong for a couple of times in the past few years are now looking beyond Hong Kong. They want to go to places where they haven’t been, for example, Taiwan, South Korea and so on,” said an executive at a local travel agency.
“The sad fact is that those who are coming to Hong Kong [from the mainland] for holiday nowadays are perhaps more from the third-tier or even fourth-tier and fifth-tier cities, so their spending power is very limited. Many of them choose those cheap group tours and are not willing to shop too much,” he said. “We see more mainland tourists like that this year. For them, free sightseeing is more important and interesting than shopping.”
Some of my mainland friends note that the sentiment towards Hong Kong as their first choice for holiday and shopping has changed due partly to growing tensions with locals over many social problems. They say Hong Kong is not considered a friendly travel destination any more. On the other hand, the Hong Kong government is of course trying its best to rebuild its image as the shopping paradise for mainland tourists.
Meanwhile, rich families from first-tier mainland cities, such as Shanghai and Beijing, are now more eager to visit New York or Las Vegas in the United States where they can buy luxury products at even lower prices than in Hong Kong.
Some economists have been already worried about the outlook of retail business in Hong Kong. Many local privately-owned small shops and restaurants have already been forced to close so far this year, thanks to fast-rising rent. They were quickly replaced by many luxury brands that considered mainland travellers their target customers.
Now the question is whether those luxury brands can survive this cold season of consumption. If not, when those shops are closed, who will be next to take over?
George Chen is the financial services editor at the South China Morning Post. The opinions expressed in the column Mr. Shangkong are all his own. Follow him on twitter.com/george_chen or weibo.com/georgeschen