Consumer
and business sentiment were more upbeat in the early weeks of 2018 than they
had been for a very long time, and indications pointed toward an ongoing
recovery in the retail sector — specifically in the diamond industry.
“Overall
consumer sentiment has been improving in both mainland China and Hong
Kong/Macau on the back of recovering fundamentals, supporting both our gold and
non-gold product sales,” a spokesperson for leading jewelry retailer Chow Tai
Fook said. The company’s third-quarter results for the period that ended
December 31 revealed that sales continued to improve year on year in both the
Hong Kong and Macau and mainland China markets.
Retail
sales value was flat in Hong Kong and Macau, while in mainland China, it grew
by 12% in the third quarter compared with the same period in 2016. Same-store
sales figures were 5% higher in both Hong Kong and mainland China. Gem-set
jewelry in Hong Kong and Macau showed same-store sales growth of 22% year on
year, with a 1% decline in mainland China. Same-store sales of gold products,
in contrast, improved by 8% over the previous year in mainland China and
dropped 1% in Hong Kong and Macau. The average selling price for both gold and
gem-set jewelry increased in both markets.
Luk
Fook, another of Hong Kong’s large jewelry retailers, reported weaker
third-quarter results for the period ending December 31. Overall same-store
sales increased 1%; gold products fell 3%, yet gem-set jewelry sales were up
10%. The company attributed the growth in gem-set products in Hong Kong and
Macau to “an upswing in the marketplace, as well as the successful introduction
of more varieties of stylish and good-value-for-money products.”
Back on trackHong
Kong’s total retail sales in November advanced for the ninth consecutive month,
growing 7.5% in value and 6.9% in volume — the largest year-on-year increase
since February 2015. Sales for the first 11 months of 2017 went up 1.8% in
value and 1.7% in volume.
Thompson Cheng, chairman of the Hong Kong Retail
Management Association (HKRMA), said its members expected a single-digit
increase in sales for December and predicted a 3% to 4% growth rate for 2018.
Cheng attributed the strong November sales primarily to the impressive visitor
numbers, which climbed 7% year on year in November — the biggest rise since
March, according to statistics the Hong Kong Tourism Board released.
The Year of the Dog
The
Chinese New Year — the Year of the Dog — kicks off on February 16, with
official celebrations continuing through February 19, and for much longer in
mainland China, where businesses typically close down for one to two weeks.
Following quickly on the heels of Valentine’s Day, the Chinese New Year is the
most important holiday of the year for locals, and a key time to spend with
family and exchange gifts. It is generally an important period for jewelry
sales, yet the Chow Tai Fook spokesperson was reluctant to comment specifically
on New Year figures.
“We
tend to focus on quarterly sales trends rather than holiday sales, as the
former provides a better indication of the underlying market momentum and
consumer sentiment,” the spokesperson said. “This year, due to the calendar
shift where Valentine’s Day falls two days ahead of the Chinese New Year, we
believe that the holiday sales’ year-on-year comparison would be even harder to
comprehend.”
Article from the Rapaport Magazine - February 2018. To subscribe click here.