World’s first Hello Kitty supermarket to open in Hong Kong, determined to defy gloomy economy

Struggling sector warned that it is unlikely to see a revival this year and popular local brands are urged to cash in over the border via e-commerce

PUBLISHED : Thursday, 09 February, 2017, 11:13pm
UPDATED : Friday, 10 February, 2017, 9:30am

The struggling retail sector is expected to stabilise following a three-year slump, with an industry head predicting a milder decline of 3 to 4 per cent for 2017, dragged down by unfavourable currency conditions and uncertainty sparked by the possibility of rigid US trade policies.

Retail Management Association chairman Thomson Cheng Wai-hung said: “The association and I believe it is unlikely that the sector will see a revival this year.”

Against a slide for the fourth consecutive year, Cheng forecast that the dip in sales would be less steep compared to last year’s 8.1 per cent.

Hong Kong retail spending plunges to 17-year-low as visitors decline and yuan weakens

He urged retailers to actively engage in the mainland’s thriving e-commerce platforms as a way to improve shrinking sales – though only a fraction of them showed any interest.

Cheng cited a stronger Hong Kong dollar fuelled by US interest rate increases, and a depreciation of the yuan, as factors further discouraging mainlanders from shopping in the city.

Harsher trade policies anticipated between the US and China would also affect the city, which had sizeable trade relations with both sides.

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To reinvent the bleak sector, Cheng called for the city’s retailers – who were accustomed to a brick-and-mortar business model – to tap into rising cross-border e-commerce platforms.

“We need a bigger cut of the pie. Retailers should think of ways to enter markets besides Hong Kong,” Cheng said, adding one of the key tasks of the association this year was to encourage more local firms to adopt online practices.

He also urged local brands to enhance their skills in the face of global competition, and to attract millennial customers.

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However, Cheng admitted that most retailers the association had been in touch with expressed little interest.

“Hong Kong firms are not ready for such practices. They were too busy dealing with mainland tourists [in the past decade],” Cheng said.

He believed that local brands could achieve decent sales on popular mainland e-commerce platforms given the solid reputation of Hong Kong products among customers across the border. “Hong Kong has been very slow [on e-commerce development], but this is something we should do,” Cheng added.

The association will co-host related courses with mainland e-commerce giant Alibaba Group – which owns the South China Morning Post – for local retailers later this year.

Despite the overall weakness, the supermarket sector has bucked the trend with sales gaining 0.8 per cent year-on-year in 2016.

Department store chain Yata plans to invest HK$150 million and open three supermarkets this year, buoyed by the optimism that Hongkongers will not give up their love of delicacies despite the gloomy economic outlook.

Its Sai Wan outlet, which will be officially launched on Sunday, will feature the world’s first Hello Kitty-themed pop-up shop with more than 200 special offerings.