Hong Kong retail sales slide 7.7 per cent in July despite upbeat tourist numbers
Decline suggests visitors are spending less; meanwhile retailers are predicting more woes in the months ahead
Hong Kong’s retail sales saw a decline of 7.7 per cent in July, even though mainland tourist arrivals rebounded for the first time in 13 months.
Last month’s figures marked the 17th consecutive monthly contraction, but the drop was smaller than in June, which saw a fall of 8.9 per cent compared with the same period last year.
However, Retail Management Association chairman Thomson Cheng Wai-hung forecast that the once-booming sector would probably not bottom out until next year, as members were reporting even worse August sales due to bad weather.
“The retail figure in July should have been better than this,” Cheng said, as mainland tourist arrivals – which make up three-quarters of total visitor numbers – saw 2.2 per cent growth last month, the first uptick since last June.
Cheng said the city’s retail figures normally moved in the same direction as visitor numbers, as tourist spending used to account for roughly 30 per cent of overall sales.
However, the divergence indicated it was no longer realistic to analyse the retail picture by purely looking at tourist arrivals, Cheng said.
“The shopping pattern of mainland tourists has changed.” Cheng said. He cited the government as saying that the average spending per mainland tourist dropped 15.8 per cent to HK$7,105 in the first six months. The figure was more than HK$9,000 two years ago.
“It is over. [The shopping spree] will never come back,” Cheng said, predicting full-year retail sales would fall in the high single digits, which could make them the worst since 1999.
The July decline was led by jewellery, watches and other luxury items – products usually popular with mainland visitors. Sales of these items plunged 26.2 per cent. Sales of electrical goods and photographic equipment sank 21.8 per cent and department store goods by 6.9 per cent.
Meanwhile, supermarket sales continued to be resilent, gaining 1.9 per cent. Medicine and cosmetics grew 9 per cent and apparel by 1.8 per cent.
A government spokesman said retail sales remained weak in July, though the decline on a year-on-year basis was slightly narrower than in the preceding two months.
“The performance in July was mainly dragged down by the decrease in visitor spending on some big-ticket items. It also reflected a more cautious sentiment among local consumers amid an uncertain economic outlook,” he added.
The retail gloom has also taken its toll on sales at Yata department store. The Japanese-style retail chain, which generates more than 80 per cent of its revenue from Hongkongers, saw sales growth slow further in July, only expanding 1.8 per cent on a yearly basis. It ended the first seven months with sales growth of 3.9 per cent.