Hong Kong retail sales decline for fifth month amid fewer tourist arrivals and stock turmoil
Decline is largest since March as tourists stay away and markets descend into turmoil
Retail sales in Hong Kong declined for a fifth straight month in July, as a further drop in tourist arrivals and stock market turmoil exacted a toll on consumption.
"Luxury goods were hit hardest," said Caroline Mak Sui-king, chairwoman of the Retail Management Association, yesterday.
"The recent stock market slump has dampened consumer sentiment."
The value of total retail sales in July dipped 2.8 per cent year on year to HK$37.6 billion, following a 0.4 per cent year-on-year drop in June. The fall in July was the biggest since March's decline of 2.9 per cent.
The government said yesterday that retail sales in the short term would continue to hinge on tourism and the negative effects of recent stock market volatility.
Mak predicted that more retailers might need to lay off employees to cut costs at the end of the year if sales continued to deteriorate.
In July, apparel sales endured a bigger retreat of 13 per cent, after shedding 3.4 per cent in June. But the value of sales of jewellery, watches and clocks, and valuable gifts recorded a smaller decrease of 5 per cent, after four months of double-digit declines.
"Retailers want to survive," Mak said. "Many are offering bigger discounts to boost revenues."
Facing a sluggish retail market, commercial landlords were now more realistic and willing to cut rents by up to 40 per cent, she noted.
But the veteran retailer warned times were tough for the industry because a number of factors outside the city, including slower economic growth on the mainland and the recent devaluation of the yuan, still weighed on sales.
She reiterated her concerns that the falling number of high-spending visitors from across the border would be a drag on the city's retail sector.
The number of mainland visitors plunged 9.8 per cent year-on-year to about 3.85 million in July, according to the Hong Kong Tourism Board's monthly report, also unveiled yesterday.
That rate exceeded the 8.4 per cent year-on-year decline in overall tourist arrivals.
Mak said heftier discounts might lose their allure and fail to win back customers who lost money in the stock market.
She also played down the effect of the likely launch of new smartphone models in the coming months. "Just one or two new products are unable to turn the tide," Mak added.
