Hong Kong retail sales slump by 3.1pc in July as consumers scrimp on luxury
Takings for last month were down 3.1pc on last year as mainland graft drive continued to bite
The summer holidays brought no relief for hard-pressed shopkeepers as retail sales declined for the sixth consecutive month - and retailers see no relief in sight until winter.
Total sales were down 3.1 per cent on July last year, government statistics released yesterday showed. It was a smaller drop than monthly year-on-year decreases from April to June, which ranged from 3.3 to 9.9 per cent.
The declines had sparked concerns that the city's retail industry was too geared towards mainland tourists; shops selling essentials had reported doing better than those offering the luxury goods visitors seek out.
A government spokesman noted that the decrease was smaller, and said the retail environment might look more stable as the effects of a spending boom last year on the comparisons eased. "However, the downside risks stemming from the recent slackening in tourist spending and external uncertainties warrant a close watch," he said.
Luxury sales continued to slump, while spending by locals remained flat.
Sales of jewellery, watches and valuable gifts were down 22.2 per cent on last year, compared to 28.2 per cent in June. Also down were sales in department stores, by 1.3 per cent, and sales of electrical goods and photographic equipment, by 10.4 per cent.
The decline came after robust growth from 2010 to 2013, during which sales of luxury goods and electrical products grew by a cumulative 164 per cent and 78 per cent, respectively, thanks to strong demand from tourists.
Visitor arrivals rose to 28.5 million in the first half of this year, up 12.5 per cent on the same period last year. But tourists no longer bought as much.
Their appetite for luxury goods has been dampened by an austerity drive and Beijing's corruption crackdown. As more tourists turned their overnight stays into same-day trips, demand for daily necessities grew while that for durable goods fell. Benefiting are cosmetics chains and pharmacies, with sales of cosmetics and medicine picking up 14.3 per cent year on year.
Retail Management Association chairwoman Caroline Mak Sui-king said political uncertainty would rock the boat from now until October, with many protests likely to fall on Sundays, a prime shopping day. "I am not against demonstrations. But it is unavoidable that businesses would be affected," she said.
The association maintains an optimistic forecast of 3 per cent sales growth for the full year.
The Federation of Hong Kong Hotel Owners also noted the political factor, saying bookings this month had been slow as visitors had expected Occupy Central to carry out its blockade of the business hub. They returned to normal as it became clear the civil disobedience plan would wait.
After a surprise contraction in the second quarter, HSBC lowered its forecast for gross domestic product growth to 2.5 per cent from 2.9 per cent for this year, and to 3.5 per cent from 3.7 per cent for next year.