Double-digit drop looms as retail gloom deepens

Top News | Sophie Hui and Avery Chen 17 Jul 2019

Retail sales for the peak July-August period will see a double-digit drop from last summer, and there is a fear the trend will continue for the rest of the year because of protests that have gripped Hong Kong for more than a month.

The Hong Kong Retail Management Association made the dire prediction while revising down its full-year retail sales forecast to a double-digit decline from single-digit growth.

"July and August have always been the summer peak season of the retail industry," the association noted, "but large-scale protests have spread in different districts lately. Our members expect business will be greatly affected."

Some shops had to suspend business, the association added, not only affecting them but also impacting employee incomes.

The worry is that protest action will affect the international image of Hong Kong as a safe place, a culinary capital and a shopping paradise.

The distress message followed Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, saying on Monday that retail and catering revenue was expected to have fallen 10 percent last month, with some operations seeing a 25 percent drop.

The tourism sector also is being hit. "From July 1 to 17 there were 190 tour groups a day - 6 percent down compared to last year," said Alice Chan Cheung Lok-yee, executive director of the Travel Industry Council, on arrivals from the mainland.

Additionally, "the number of tour group members dropped 10 percent."

The protests also affected tours from other short-haul markets, with a 20-30 percent slide in summer holiday bookings.

Chan said business from some short-haul markets could be down by 50 percent, and people in the business also worried that long-haul markets would be hit.

The gloomy readings follow a hefty rebound on arrivals in the first six months of the year when 39,332 mainland tour groups checked in, meaning around 220 groups a day.

That was 34.3 percent more than during January-June 2018.

And 5,641 mainland groups had visited Hong Kong in June, up 23.2 percent on the month last year.

For Chow Tai Fook Jewellery the present uncertainties add to gloom that was setting in before the protests.

Its same-store sales growth in Hong Kong and Macau declined 11 percent year-on-year from April to June after with a 1-percent increase in the first three months of this year. That was put down to cautious consumer sentiment in the macro environment by the jewelry giant yesterday.

Also in April-June, retail sales growth in Hong Kong and Macau fell 6 percent year-on-year, while same-store sales volume growth dropped 14 percent.

In the mainland, however, Chow Tai Fook's retail sales rose 24 percent from April to June and same-store sales 11 percent, though volume fell 3 percent.

Cosmetics retailer Sa Sa International last week revealed it was starting to feel the effect of protests.

"Social issues that started in the second week of June affected business at some of the company's retail stores," it said.

"This depressed sales for the rest of the month."

For the April-June period, same-store sales fell by 15.3 percent to a three-year low due to an eight-percent drop in total transactions. The number of transactions involving local customers fell by 1.6 percent while for mainland tourists there was a decrease of 12.9 percent.

Back to business at its basics, the Federation of Hong Kong, Kowloon, New Territories Hawker Associations held a rally outside police headquarters in Wan Chai yesterday to support the force in enforcing the law.

Hawkers said business has been affected greatly by protests since last month.

A hawker named Chan, who sells crafts on Temple Street, said sales to mainlanders and foreign visitors had dropped by 40-50 percent.

The Practicing Pharmacists Association of Hong Kong was also grumbling about a violent protest in Sheung Shui on Saturday disrupting operations of dispensaries.

Pharmacies provide essential health-care services, the association said in appealing for people "to respect the rights of patients and public to have access to life-sustaining medicines and health-care services while they are fighting for their own rights in protest activities."

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