Department store chain Yata, the Japan-themed retail unit of Sun Hung Kai Properties, is expanding as sales rise on the back of the weaker yen that is making goods cheaper.
Yata's total retail area will increase by one-third to 400,000 square feet after three new stores are opened between June and September. A new store in Tsuen Wan will be the firm's first in two years. It last opened one, a supermarket in San Po Kong, in September 2011. The other two shops will be supermarkets in Tuen Mun and Mong Kok.
One reason for the acceleration of the chain's expansion is the unusual opportunity presented to it by the vacating of a large site in Tsuen Wan Plaza by Aeon Stores (Hong Kong). Aeon moved to a nearby site.
"It is not easy to get new space for a department store, as Hong Kong landlords tend to break the shopping mall into smaller shops for greater return," Yata managing director Daniel Chong Wai-chung said.
When it opens on June 28, the 87,000 square foot Tsuen Wan store will compete against several nearby stores, including Aeon and Citistore.
"Tsuen Wan's market potential is untapped. It is an old district where many of its residents have finished paying off their mortgages. Their disposable incomes are high, although the average income in the district is lower than what it is in Tai Po," Chong said.
He expects the new store's sales to be 65 per cent of those at the one in Tai Po, given that the two stores are similar in size.
Chong said Yata would have 11 stores in Hong Kong by 2017, up from three now. Four sites are being negotiated, including one on Hong Kong Island.
Thanks to the 25 per cent devaluation of the yen since September, sales at Yata's supermarkets in Tai Po, Sha Tin and San Po Kong increased 22.4 per cent year on year in the first four months of the year. Demand for Japanese beef and pork had risen 25 per cent.
Demand for prepackaged foods such as snacks, seasoning and drinks also rose, as their prices have dropped by more than 20 per cent.
But overall sales at the three stores, including apparel, electrical appliances and household goods, rose just 9.5 per cent year on year in the first two months of the year. Chong said the figures were consistent with the slowdown in retail sales growth in the city.
Yata stopped hedging fluctuations in the value of the yen in October. In the past, the firm would buy yen in advance to cover future payments, to alleviate the impact of any appreciation of the yen.
Chong said the company stopped its hedging activities when Japan's prime minister, Shinzo Abe, indicated he would boost the economy by weakening the yen.