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Hong Kong
By Mary Kavanagh
Retail sales in February fell for the twenty-fourth consecutive month. Total sales declined 5.7 percent in value and 6.1 percent in volume compared to the same period in 2016. On a more positive note, sales in the jewelry, watches and clocks and valuable gifts category increased 2.5 percent in value in February 2017 although volume was down 2 percent. “We expect to see some improvements in the second half of the year,” said Thomson Cheng, chairman of the Hong Kong Retail Management Association (HKRMA), who also emphasized that he does not expect to see a rebound of the figures this calendar year. The number of visitors to Hong Kong increased 1.4 percent over the first two months of 2017, yet sales were still down due to a decrease in spending power. Overnight visitor spending fell from $930 in 2015 to $843 in 2016 and the Hong Kong Tourism Board predicted a further decline of 5.2 percent in 2017. “The performance of retail sales was still constrained by the lack of growth in tourist spending despite the modest recovery of visitor arrivals in recent months,” a government spokesman said. “Looking ahead, the performance of retail sales will depend on the recovery pace of inbound tourism as well as whether consumer sentiment will be affected by the various external uncertainties,” he added.
But all is not doom and gloom and there are hopes for a better second half. Retailers are hopeful that the planned celebratory events to mark the twentieth anniversary of Great Britain’s handover of Hong Kong to Mainland China will attract many international visitors and help reverse the downward trend in sales. Chinese tourists are now also being discouraged by the Beijing government from visiting Korea, an increasingly popular shopping destination over the past year, due to the deployment of a U.S. missile defense system there. Retailers hope those visitors will now choose to visit Hong Kong over Korea. Vincent Yiu of Brilliant Diamond Trading Company is also more positive about recent activity in the diamond trade. “I think the local Hong Kong market is very healthy, with lots of enquiries and orders in the couple of weeks after the Hong Kong March show,” he said at press time. “Business should be steady in March and April. Lots of items are selling with firm and better prices than at Christmas time, so it’s a good sign,” Yiu added. “The mood is better among diamond cutters too, helped by the fact that our factory is to start manufacturing melee in 10 point and 15 point parcel goods,” he said.
David Nazer, managing director of Haywards, a bespoke jeweler specializing in engagement and wedding rings, who caters predominantly to expatriate clients, said that although business has been growing, they are not as busy as they would expect to be. “We are not seeing as many high value purchases — apart from engagement rings — as we would expect,” he said. “We haven’t done a pair of $25,000 to $40,000 earrings for a while,” he added, noting they used to do at least one pair a month. He attributed the decline in demand to the lack of job security in the banking industry. Nazer has seen an increase in the number of expatriate customers traveling from southern China and from further afield in the region. Most of these customers have been referred by word of mouth or via online channels. “Presence on digital channels is very important,” he said. Customers come to Haywards for something different that they can’t find elsewhere. “That’s what we offer. We can help them find the cut they want, the stone they want,” he said, adding that he has recently seen an increase in demand for sapphire engagement rings. Key to the Haywards experience is the collaboration between jeweler and client. “There are a lot of conversations and a lot of back-and-forth between us and our clients in the process until both sides are happy. We want it to be an experience for the client,” he said. Many of Haywards’ clients are repeat customers. “You make an engagement ring, they come back for a wedding band, and later a push present or birthday present, and so on.”Article from the Rapaport Magazine - May 2017. To subscribe click here.
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