HONG KONG—Christmas sales in Hong Kong held up but some market watchers voiced concern about sluggish sales in gift-giving categories such as jewelry and the challenge of attracting mainland tourists.
Hong Kong has long been the go-to destination for mainland Chinese shoppers, but luxury retailers are, in some cases, feeling the pinch as well-heeled Chinese customers start to favor other shopping meccas.
“Brands that are China-centric have suffered quite a bit in 2014,” said Ashley Micklewright, chief executive of Bluebell Group, which markets and distributes luxury brands in Asia. On top of the crackdown on expenditure in mainland China, lots of Chinese are now starting to travel to Europe as well as to South Korea and Tokyo.
The Hong Kong Retail Management Association said that compared with 2013, most retailers registered mid- to high-single digit increases during Christmas.
“Some members reflected that the weaker sales in this year’s Christmas was due to the fact that many local customers had gone for vacation aboard during the long Christmas holidays,” the retailer association wrote in its most recent report.
Pro-democracy protests – which went on for two months starting in late September, put a dent in sales during the last quarter of 2014. While some noted immediate impact to sales due to disruption to foot traffic, others were more concerned about delayed impact as visitors choose other locations over Hong Kong.
Chow Tai Fook, the Hong Kong-based jeweler, said same store sales dropped by 21 percent in Hong Kong and Macau during the last three months of the year due to poor customer sentiment. Sales were only slightly less weak in mainland China where same store sales declined 15 percent.
“We were anticipating quite a good year end but it is absolutely true that demonstrations in the last quarter certainly affected results, said Bluebell’s Micklewright, noting that sales dropped 5 to 6 percent lower than expected but still wound up higher than in previous years,” he said.
Airplane ticket prices in the region have dropped amid increased competition and airlines have slashed fuel surcharges as oil prices near six-year lows. In addition, price differentials – foreign luxury goods sold in mainland China are often double the price sold in their home markets partly because of duties, while prices in Hong Kong tend to be about 30 percent higher than home countries – which were somehow accepted in the past are now becoming less and less acceptable, added Micklewright.
Growth in visitor arrivals to Hong Kong between January and November stayed steady in 2014, according to the Travel Industry Council on Hong Kong not decreasing but not increasing either. Visitor numbers rose by 12.4 percent in the period between January to November 2014 over the same period a year ago. Similarly, the number of visitors grew 12 percent over the same time period in 2013.
That said, not everyone is feeling the pinch the same way. Local Hong Kong customers are becoming more important to some retailers.
Sun Hung Kai Real Estate Agency Limited, which manages a portfolio of 12 shopping malls in Hong Kong, mostly in the new territories near the Chinese border, said malls all “registered impressive traffic and sales” during the Christmas holidays. The malls all “recorded substantial growth in both traffic and sales reaching a total of 12 million in traffic and sales turnover at 250 million dollars, which is a 12 percent and 15 percent increase against last year, respectively, during the holidays,” said Maureen Fung, Sun Hung Kai’s general manager for leasing.