New | Hong Kong’s Sincere Company urges government to support efforts to boost retail, help restore momentum
Philip Ma King-huen, chairman of the 116-year-old Sincere Company, believes city lost its ‘feel good factor’, believes help is needed to bring back consumer confidence
Hongkongers are living in a city overwhelmed by social conflict and the grievances of its young, and need to get their mojo back, according to one of the city’s leading retailers.
One way to restore confidence would be for the government to join hands with big business to organise a big promotional shopping campaign, said Philip Ma King-huen, chairman of the 116-year-old Sincere Company, Hong Kong’s first Chinese-owned department store.
“Hong Kong’s feel good factor has gone,” Ma told the South China Morning Post.
“Frankly speaking, you will not shop for a single shirt or another pair of shoes if you don’t feel good. We need more positive momentum to move the city forward,” he said.
Hong Kong retail sales have been falling for almost a year, and the most recent numbers show they were down a steep 13.6 per cent in the first two months of 2016 alone, the biggest slump since 1999.
Sincere, which operates six stores in Hong Kong, lost HK$93 million for the six months to August 2015.
Ma, the third generation of the founding family to head Sincere, noted the importance of spending in the quest to rejuvenate Hong Kong’s economy.
“The retail industry employs 300,000 people. Together with those working in wholesale, logistics and hotels, that adds up to 900,000 people employed by the whole supply chain,” said Ma,
He recalled a big campaign a decade ago calling for people to spend more in the city, but notes a change in attitudes today .
“But now, you will be mocked by friends if you don’t travel overseas whenever you have a holiday. Or you will be frequently asked if you travelled to Japan because the yen fell,” he said.
And it’s not just locals going abroad that is hitting sales. The number of tourist arrivals in Hong Kong has been declining for a year, especially the big-spending visitors from the mainland.
Among the six Sincere stores, Ma said its Mong Kok branch had been hit hard result of the aftermath of the riot there at the start of the Lunar New Year and by the Occupy movement in late 2014.
“Our sales did not return to the level prior to Occupy,” he said.
He noted that Hong Kong is a place for international events, like the forthcoming FIA Formula E Hong Kong electric car ePrix on October 9. So the government should make use of these global events and join hands with industry and other partners to kick off shopping extravaganzas.
“It will also attract more people visiting Hong Kong,” he said.
But things will remain tough for Hong Kong’s retailers. Ma believed that Hong Kong Disneyland, one of the city’s top tourist draws, will be affected once the Shanghai Disney park opens in June.
“Mainlanders would prefer to visit Shanghai Disneyland where they share the same language and, more importantly, no one will kick their suitcases,” he said, referring to cases where mainland shoppers have been hassled in Hong Kong by locals unhappy that their massive purchases are driving up prices and creating shortages.
For its part, to stay competitive Sincere has won a “double-digit” cut in rent at its Causeway Bay store, where it is due to renew the lease for another three years.
Negotiations for the lease renewal for the Mong Kok store will be in July, Ma said, adding that Sincere cannot terminate the leases early even if it fails to get a rent reduction.
Unlike small players, he said big department store operators normally take up bigger spaces and sign up to longer leases, such as eight years.
“Hong Kong’s soaring rents have significantly squeezed retailers’ profit margins,” he said, adding that they are also to blame for killing business expansion and innovation.
In the face of these multiple challenges, Sincere needs to rejuvenate its image by exploring different new brands from Europe and South Korea and selling at lower prices .
“Sincere is a household name but it also gives the impression that it is not my brand, but my mother’s and grandmother’s,” Ma said.
But one option to change that dynamic – setting up a relaxing coffee shop in the store – is not on the table.
“It is a luxury in Hong Kong. I would love to do it for my customers, but how I can cover rental expenses if I allocate spaces for a cafe that sells coffee just for HK$30 each?,” he said.
Ma is now looking to make use of Sincere’s 50 to 60 years of experience sourcing apparel from Europe with its well-established network of suppliers to help bring in new fashions at lower prices.
“We definitely enjoy a price advantage as we have built up very good relations with our suppliers,” he said.
Ma, who was recently in Europe looking for new fashion brands, said some European fashion wholesalers have decided to close because of the slowing economy in the continent.
“It provides golden buying opportunities for a firm like Sincere,” he said.
He said the firm bought several thousands of pieces of clothing from different European brands at attractive prices, meaning customers will also enjoy good prices.
Another trend that could help lift sales is the rest of Asia’s love affair with South Korean TV dramas, K-pop music beat and South Korean movies, which are spurring demand in Hong Kong and elsewhere for South Korean fashion and accessories.
Sincere will also bring in South Korean fashion brands to appeal to younger shoppers, he said, noting that market trends in South Korean fashion change fast, although prices are cheaper than European brands.
“Our buyers fly to South Korea once every two months. We bought a collection this week, and the clothes will be on the shelves in our stores next week,” he said.
