Retail sales in Hong Kong increased marginally in April by .1 percent in value — a much lower increase than the 3 percent rise in March, which ended 25 months of consecutive decline. Retail sales volume dropped .1 percent in April, in contrast to the 2.6 percent gain in March. Overall numbers from January through April in 2017 were down 1 percent in value and 1.4 percent in volume year on year. Sales of jewelry, watches and clocks, and valuable gifts increased in value by 5 percent. Thomson Cheng, chairman of Hong Kong Retail Management Association (HKRMA), said sales of jewelry and luxury watches would remain sluggish. “We don’t see any trend pointing to [the sale of] these expensive items picking up at any time,” he reported in the South China Morning Post, noting that overall the April figures were quite positive, with most categories recording modest growth. Most of HKRMA member companies said they expected sales performance to improve gradually throughout 2017 and the association predicted a decline of less than 1 percent in value for the first half of the year.
A spokesperson for the government said, “Retail sales held largely stable in April compared with year-ago levels, amid the sustained recovery of visitor arrivals. In recent months, the drag from the fall in tourist spending eased and local consumer sentiment continued to hold up well. Looking ahead, the near-term outlook for retail sales will hinge on the recovery pace of inbound tourism as well as the resilience of local consumption sentiment in the face of the U.S. interest rate upcycle and other external uncertainties.”
Statistics from the Tourism Board showed that visitor arrivals in April were up 1.9 percent over the same period last year and up 3.2 percent for the first four months of 2017. The recent growth provided much-needed relief to the tourism industry, which in 2016 weathered a 4.5 percent drop in inbound visitors.
STABILITY
Thomson Cheng predicted sales value for 2017 will remain roughly the same as 2016, saying the HKRMA cannot guarantee there will be growth this year. But on a positive note, he said they are seeing the market starting to stabilize. “If local demand, which accounts for 70 percent of all sales, remains robust, a rebound of inbound visitors would translate into a positive sales outlook,” he pointed out.
Chow Tai Fook (CTF), reported a 3.9 percent rise in profit for the financial year that ended March 31, 2017, in line with analyst expectations. Revenue fell 9.4 percent over the same period, a smaller drop than the 12 percent decline in the 2015/2016 financial year. Same-store sales in Mainland China fell 5.2 percent, whereas in Hong Kong and Macau the number was 12.4 percent. Company Chairman, [Henry Cheng, said, “Although there is still a long way to a full-fledged recovery for our operations, we will remain focused in striving for sustainable growth by meticulously executing our initiatives. We have started to provide a holistic jewelry retail solution on a global scale by leveraging our vertically integrated business model.”
The company’s long-term strategy will focus on reaching out to wholesalers in the U.S. and expanding its network in Mainland China. Executive Director Adrian Cheng, announced, “The group wants to open 70 to 100 more stores in Mainland China in the next financial year, mainly in third-tier and other cities.” The firm opened three new retail locations in South Korea, Malaysia and the U.S. in the last financial year to tap into the demand from Mainland tourists travelling and/or living abroad.
In an ongoing effort to optimize retail sales and operational efficiency, CTF closed seven shops in Hong Kong and Macau over the past financial year and opened a number of new ones on the Mainland, resulting in a net gain of 62 outlets over the period, a total of 2,381 retail locations at the end of March 2017. CTF shares have risen 41 percent so far this year.
JUNE SHOW
The thirtieth edition of the June Hong Kong Jewellery & Gem Fair took place at the Hong Kong Convention and Exhibition Center from June 22 to 25. The show attracted almost 2,100 exhibitors from 40 countries and regions, with 420 exhibitors in the Diamond pavilion. A new feature this year was the CORE pavilion, a dedicated area for jewelry companies that have supported the Jewellery & Gem Fairs in Hong Kong over the years and consider Hong Kong as the platform from which they grow their business. “The launch of the CORE Pavilion adds to the exciting lineup of attractions and potential business opportunities,” said Celine Lau, director of jewellery fairs, UBM Asia.
Article from the Rapaport Magazine - July 2017. To subscribe click here.