Protests take a toll on sales at Watsons, one of Hong Kong’s most instantly recognisable retail chains
- Health and beauty giant Watsons has seen sales plummet during almost two months of frequent street rallies, says managing director Diane Cheung
Seven weeks of unprecedented civil unrest have taken their toll on one of Hong Kong’s most instantly recognisable retail chains.
Health and beauty giant Watsons has seen sales plummet during the period the city’s streets have been frequently taken over by an army of angry protesters occasionally clashing violently with riot police, according to managing director Diane Cheung. She said other factors had also contributed to the decline, but the Watsons shops in districts at the centre of the massive rallies were among the worst affected.
“Month-to-date July our sales have fallen by a double-digit [percentage] from the same period last year,” she told reporters on Monday after a product launch event.
“That said, last year’s comparison base was relatively high, and given we achieved favourable first-half sales and that we expect openings of new and renovated stores in the second-half, we believe we will fare better than the entire retail market for the full year.”
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Watsons’ ubiquitous shops in Hong Kong are owned by AS Watson Group, a multinational retail giant itself a unit of tycoon Li Ka-shing’s conglomerate CK Hutchison. Sales declined year on year in June and July, according to Cheung.
She expects Watsons to have 260 stores in the city by year-end, up from 240 currently.
Hong Kong has endured a string of increasingly violent protests and civil disobedience events over a now-shelved bill that would have enabled suspects to be transferred to mainland China, where critics say fair trials are not guaranteed.
The Hong Kong Retail Management Association two weeks ago issued a forecast that the city’s total retail sales value would drop by a double-digit percentage for the whole of this year, replacing an original projection of single-digit growth.
It cited the ongoing summer protests, which have spread to different districts and seriously affected the city’s image as a safe, world-class tourist and shopping destination.
In June and the first week of July, most of its members reported a single to double-digit sales value decline in their roughly 8,000 shops. July and August are the peak retail seasons.
Cheung said the weak summer sales were made worse by other factors that had caused a drop in spending by both tourists and Hongkongers.
Weaker economic growth in mainland China amid a protracted trade war with the US, devaluation of the yuan against the Hong Kong dollar and the cut in mainland value-added tax on luxury goods to 13 per cent from 16 per cent have been blamed for weaker spending by mainland tourists.
Spending by mainland Chinese tourists makes up 40 per cent of Hong Kong’s retail sales.
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Cheung was speaking at an event to launch sales of saliva-based DNA tests made by local start-up Prenetics at Watsons’ Hong Kong stores and online platform – the first in the city, the company claims, to take cancer risk evaluation direct to consumers.
Under an exclusive partnership, the pair will bring four different test kits related to diet, fitness, family planning and the risks of developing diseases including 36 types of cancer, and dementia.
They include a 30-minute post-test counselling session, extendable if customers need extra advice to deal with potentially unfavourable readings. The tests could help Watsons cross-sell its health products.
Prenetics’ CEO and co-founder, Danny Yeung, stressed that the cancer tests merely indicated risk levels – which can range from 15 to 80 per cent – and customers may need further medical advice and diagnostic tests.
The firm offers no guidance on the suitable age threshold for taking such tests, leaving it to parents to decide whether to have their children tested.
York Chow Yat-ngok, an orthopaedic surgeon and a former Secretary for Food and Health in Hong Kong, recently warned that cancer risk tests often raise questions that cannot be answered, such as what to do next.
