The Year of the Dog appeared to get off to a good start in
Hong Kong, with the number of mainland visitors to the city increasing more
than 14% between February 15 and 18, according to the Hong Kong Immigration
Department. Retail-sector lawmaker Peter Shiu Ka-fai said the growth in tourist
numbers as compared with last year’s Chinese New Year period benefited retail
businesses, with Sun Hung Kai Properties reporting a 13% rise in foot traffic
and a 16% improvement in sales at its 12 malls from February 10 to 19.
Yet the cancellation of the annual Chinese New Year
fireworks that had been scheduled for February 17, the second day of the Lunar
New Year holiday, left many businesses concerned about sales. Hong Kong Chief
Executive Carrie Lam called off the fireworks display following a bus accident
in the city that claimed 19 lives and left several people injured. The display
was due to take place on the seventh day after the tragedy — the point in time,
according to Chinese tradition, when the spirit of a dead person returns home
for a final farewell to loved ones. Yiu Si-wing, a tourism-sector legislator,
said the cancellation had hurt business at restaurants, shops and hotels. Time
will tell what the true impact of the cancellation has been.
Overall positive sentiment
The mood during the run-up to the most important annual
holiday for locals was generally positive. Retail sales for 2017 returned to
growth, recording an increase of 2.2% over the previous year and marking the
end of a three-year decline. In December, retail sales climbed 5.8% in value
and 4.3% in volume year on year. Thomson Cheng, chairman of the Hong Kong
Retail Management Association (HKRMA), reported that association members were
generally upbeat about retail performance in the first two months of 2018 and
forecast an increase in sales of 5% to 6% for January and February.
Nancy Liu, head of Forevermark Diamond Jewelry, Asia
Pacific, reported “healthy and steady growth in jewelry sales in the last two
quarters of 2017 compared to the previous year,” forecasting a modest uptrend
in the coming months.
“With Valentine’s Day on February 14 followed so closely
by Chinese New Year on February 16, we are inclined to be more conservative on
sales, because most people will be busy enjoying the Chinese New Year
festivities with family in their hometowns for a longer period, thus diluting
shopping traffic,” said Liu.
Millennial buying habits
Millennials’ diamond-jewelry buying habits in China, which
differ from those of their parents’ generation, are driving the market,
according to Liu. “China is predominantly a bridal market for diamond jewelry.
Still a very fragmented market in tier-three and tier-four cities, consumption
is driven by bridal solitaires. We see a trend to upsell from below 20 points to
30 points and even larger sizes as millennials are spending more on diamond
jewelry, which previously did not account for a major portion of their
wedding-jewelry spending.
“In tier-one and tier-two cities, we see an increase in the
trend toward self-purchase, with more and more millennials looking for unique
designs. They get their first piece of diamond jewelry from gifting or
self-reward, rather than from marriage. A round brilliant cut is still the most
sought-after stone, although fancy shapes are gaining traction. In terms of
design categories, jewelers are incorporating more pendants and both half and
full eternity rings to embrace this change and meet millennials’ needs,” Liu
said.
Article from the Rapaport Magazine - March 2018. To subscribe click here.