Hong Kong posted a 10.5 percent drop in August retail sales and the city is unlikely to reverse its dwindling sales trend until the end of the year, according to the local retail management association.
“It’s still in a shrinking mode…I think Hong Kong will be into December before you see the bottom,” Hong Kong Retail Management Association chairman Thomson Cheng said Friday. The August figures mark the 18th straight month of declining sales for Hong Kong.
He was speaking to reporters to announce the latest set of monthly retail figures on the eve of Golden Week. Usually one of the biggest shopping seasons of the year in China, the week-long holiday beginning Oct. 1 is akin to Black Friday or Christmas in the U.S. But Cheng warned that the upcoming week wouldn’t “help much” to stop the decline.
August retail sales fell 10.5 percent from a year ago to 33.9 billion Hong Kong dollars or $4.37 million. Cheng said the weak numbers were due in part to the typhoons and heavy rains the city received during the month which deterred shoppers.
Year to date, sales have declined 10.2 percent. Cheng said he believes that Hong Kong retail will experience about a 7 to 8 percent drop in sales this year.
The number of Mainland Chinese tour groups to the city for Golden Week have halved, he added, and individual travelers which tend to spend more are likely to use the seven-day holiday to travel somewhere further afield.
Those factors, plus an indication from Beijing that they want to stimulate domestic spending spell bad news for the city.
“The general direction is the Beijing government hopes that mainland consumers will spend domestically and it will affect Hong Kong’s position,” Cheng said. “It is certainly not a good thing I believe [for Hong Kong retail]. You might see that the Chinese government every few months will put out some measures to encourage domestic spending.”