Is Hong Kong Doing Enough to Revive Slumping Retail Spending?

    Hong Kong is trying to lure back Chinese tourists as retail sales decline for the seventh month in a row, but it may be up against forces out of its control.
    Times Square mall in Hong Kong. (Courtesy Photo)
    Jing DailyAuthor
      Published   in Retail
    Times Square mall in Hong Kong. (Courtesy Photo)
    Times Square mall in Hong Kong. (Courtesy Photo)

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    As mainland visitor numbers and luxury retail sales remain on a downward trajectory in Hong Kong, both government officials and retailers are undertaking a variety of efforts to prompt a turnaround. However, new promotions and tourism policies may not be able to counteract economic forces out of their control as Chinese shoppers continue to flock to other countries in the region to shop.

    According to a report this week, retail sales in Hong Kong dropped for the seventh month in a row in September with a year-on-year decline of 6.4 percent. This was the worst drop since January, and luxury was hit the hardest. Sales of jewelry, watches, clocks, and valuable goods plummeted 22.9 percent, marking the biggest decline since June 2014, and clothing and footwear sales dropped 11.6 percent.

    As a result, retail landlords are employing a variety of tactics to keep foot traffic up and stop a wave of store closings that have hit the city. Some malls are upping their promotion budgets to lure customers through the doors, such as Sun Hung Kai Properties, which is increasing spending on promotions this year from HK$23 million to to HK$25 million. The mall hopes that more holiday displays, special family-oriented attractions, and gifts for shoppers will keep customers coming and prevent brands from following in the footsteps of Coach and TAG Heuer, which both closed Hong Kong stores this year.

    Since the retail slump coincided with a continued decline in mainland Chinese tourist numbers, which sunk 4.7 percent in September, Hong Kong tourism officials are also working on ways to lure back visitors. Hong Kong’s tourism board chief recently proposed an initiative to allow mainland Chinese visitors to apply for Hong Kong visas online. In addition, Hong Kong’s government has recently made efforts to show that it is cracking down on “forced shopping” tourism after a mainland tourist was killed outside a jewelry store as a result of an altercation with tour guide allegedly trying to force travelers to make purchases. Customs officers arrested the sales supervisor at the jewelry store this week, and are investigating other store employees and tour operators connected to the case.

    The decline in mainland tourists may be out of Hong Kong’s control, however. Although the forced shopping incident and an outpouring of anti-mainland sentiment have been bad PR for Hong Kong this year, many mainlanders are simply avoiding traveling there due to high prices. As the Hong Kong dollar remains high, Chinese shoppers are letting their wallets do to the deciding and heading to Japan or Europe to shop thanks to the weak yen and euro. Although this is bad news for Hong Kong retailers for now, luxury brands can benefit by focusing on the current Chinese shopping hotspots, which are constantly shifting along with global economic changes.

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