Hong Kong retail sales reflect tourism downturn
The devil is in the detail in the August Hong Kong retail sales data.
Census and Statistics Department (C&SD) figures show a 5.4 per cent drop year on year in the total value of retail sales in August, provisionally estimated at $37.9 billion.
After netting out the effect of price changes over the same period, the volume of total retail sales in August 2015 decreased by 0.2 per cent.
The root cause of Hong Kong retail industry’s challenge is very clear from the breakdown of the data by category. It’s the reduced volume of inbound tourists from the mainland – and their reduced spending. And, to a degree, a shift in the timing of the Mid-Autumn festival, although early indications from retailers say this year’s trade is one of the worst on record.
A government spokesman observed the fall “was in part due to the slowdown in inbound tourism, while the stock market gyrations of late might also have dented consumer sentiment”.
Here’s where the detail comes in:
- Sales of Chinese drugs and herbs fell 17.4 per cent.
- Apparel fell 13.5 per cent.
- Jewellery, watches and clocks and valuable gifts by 8.8 per cent.
- Department store sales by 8.6 per cent.
These are all categories which in the past were supported heavily by inbound tourists. Those tourists – lured by the prospect of their cash stretching further, are now heading to Japan, South Korea (now the Mers crisis is over) and Europe. Especially those who can afford the higher air fares to such destinations.
In other categories, medicines and cosmetics fell 5.1 per cent, food, alcoholic drinks and tobacco by 10.2 per cent, books, newspapers, stationery and gifts by 4.4 per cent; footwear and accessories by 4.4 per cent; furniture and fixtures by 5.9 per cent and optical shops by 8.1 per cent.
The only bright spots for the month were “miscellaneous consumer durable goods” up 50.2 per cent (it’s a small category) and photographic equipment up 3.9 per cent. Supermarket sales rose a meagre 0.4 per cent.
Seasonally adjusted, the value of total retail sales decreased by 0.2 per cent in the three months to August compared with the preceding three months, while the volume of total retail sales remained virtually unchanged.
The government spokesman concluded: “The near-term outlook for retail sales is still subject to uncertainties, depending on the performance of inbound tourism and on whether there would be further negative impact from the recent heightened stock market volatility.”