Poon says discount days are at an end

Retailer Dickson Concepts (International) believes its 21-month slump is over and plans to stop slashing prices.

The strategy is simple, according to executive chairman Dickson Poon.

He views the retail business in hard times as a tug-of-war between retailers and consumers.

'When retailers slash prices too aggressively, consumers will hold off on their spending,' he said.

However, 'if retailers believe in a pick-up in consumer spending and demonstrate their determination to hold prices steady, consumers will start spending again.' Mr Poon believes retailers are in a better position to stay firm on their prices because of cautious inventory management.

'In preparing for the latest fall-winter collections six to eight months ago, most retailers were more cautious than ever in ordering new merchandise in an effort to avoid excessive inventory build-up,' he said.

With less inventory, retailers are facing less pressure to slash prices in an effort to sell stock.

Mr Poon said retailers' profit margins would improve gradually, taking time to reach levels enjoyed before Hong Kong's retailing slowdown began two years ago.

Dickson Concepts, which owns the Seibu department store in Hong Kong and distributes Polo Ralph Lauren products in Southeast Asia, intends to invest in new retail outlets as the SAR's economic climate improves.

Mr Poon said the company's cash flow should return to a positive level this year in time to finance plans to open 12 outlets in Taiwan.

The company has no immediate plan to utilise its $500 million cash-in-hand reserve to pay for the capital expansion.

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