Food prices at the Japan-themed department store chain Yata will fall further when three new outlets open in the next three months, it said.
Although the chain, the retail arm of Sun Hung Kai Properties, said it did not expect the yen to decline much more, Yata's chief executive, Daniel Chong Wai-chung, said prices of fresh and prepackaged food at its supermarkets could go down a further 2 to 3 per cent thanks to economies of scale.
Yata's food prices have dropped 7 to 12 per cent since the yen started falling in October. Some products, such as Japanese noodles, now cost less than they did in 2009.
Chong said, however, that the drop in retail prices of Japanese goods could never fully reflect the rate of the currency's depreciation, as there were other costs, such as transportation and wages, that were not settled in yen.
The weakened yen has rescued Yata from slowing local consumption of fresh food and household accessories. Sales at its Shatin mall store rose 10.1 per cent in the first five months of this year, while those at its supermarkets in Tai Po and San Po Kong rose 15.8 per cent.
The opening of a new department store in Tsuen Wan and two other supermarkets in Mongkok and Tuen Mun is the start of an expansion plan that is expected to roughly double the number of Yata stores in Hong Kong to 11 by 2017. Chong said another store will open in Kowloon next year.
While sales volume at supermarkets in the city grew only 4.4 per cent during the first four months of the year, with sales of fish, livestock and poultry contracting by 2.2 per cent, Chong said Yata's different market positioning and strategies would give it an edge over its rivals.
In its Tsuen Wan store for example, the chain will introduce several new ideas, including a "fresh vegetable lab", where customers will be able to pick salad vegetables grown on a wall equipped with an irrigation system. The store will also set up a bar where customers will be able to eat freshly made sushi and seafood grilled to order.
The Tsuen Wan store will open just across from Jusco, another Japan-themed department store, but Chong said he was not worried about the competition.
"With more Japanese stores coming to the area, we can create more traffic," he said.
While mainland shoppers are seen as the backbone of Hong Kong's retail market, Chong said they made up less than 14 per cent of Yata's overall sales.
He said he expected them to play a bigger role at the new Tuen Mun supermarket, however, given its proximity to Shenzhen. Around 1,800 square feet will be dedicated to mainland shoppers' favourite baby products, Chong said.