HONG KONG — Retail sales should see a decline of about 7 percent this year, Hong Kong Retail Management Association chairman Thomson Cheng said Thursday, as new data showed the contraction in October sales narrowed to 2.9 percent.
“The year to October is down 8.9 percent so probably this year should be around negative 7 percent,” Cheng said on a phone briefing.
Retail sales for the month of October fell to $36.1 billion, slowing from the 4 percent year over year decline seen in September and the 10.5 percent drop in August. This week, Lane Crawford chief executive Andrew Keith also noted improving trends for the luxury retailer’s stores in Hong Kong.
Cheng said the climate has improved significantly. “The coming November and December should be more stable,” he said. However, the month of February, which comes right after Chinese New Year in 2017, will likely be under pressure as people typically put away their wallets for a time after the holiday.
He also said that to his knowledge, the 20-month consecutive slide is the longest running decline in the last decade.
In October by category, apparel dropped 5.1 percent while sales of medicine and cosmetics fell 1.8 percent. Jewelry, timepieces and valuable gifts edged down 0.1 percent while footwear and accessories grew 4.9 percent.
Cheng said retailers should be closely watching what happens with the U.S. economy under a Donald Trump presidency.
“The new president’s policy seems to be a bit concerning and everyone is looking at whether interest rates will go up and the dollar will rise. Because of the Hong Kong dollar peg to the U.S. dollar, we might compared to other cities be pushed higher and become more expensive so this would have a big impact on sales,” Cheng said.
He was less worried by local political tension. Hong Kong has seen several anti-Beijing protests over interference into the city’s greater political freedoms but Cheng called the impact “remote”.
“It’s difficult to make any correlation to the political situation and retail sentiment,” he said.