Hong Kong malls bet on local demand to ride out sales slump
01/12/2016 09:17
* Hong Kong October retail sales fall for 20th straight
month
* Hong Kong malls adjust tenant mix to draw in local buyers
* Companies spend on quirky experiences, pop-up stores
* Sun Hung Kai allocates 10 percent more for Christmas
promotions
By Donny Kwok
HONG KONG, Dec 1 (Reuters) - Hong Kong mall operators and
retailers, plagued by a prolonged slump in sales, are now
digging deep in to the local market to revive their business
that has slowed due to a plunge in the number of visitors from
mainland China.
Chinese-controlled Hong Kong was once a favourite shopping
destination for mainland tourists, but the numbers have dwindled
since 2014 amid Beijing's campaign against graft and shows of
wealth by public officials. Pro-democracy protests in Hong Kong
have hurt too, while a firm local currency HKD=D3 means luxury
goods are cheaper elsewhere such as in Japan and South Korea.
Hong Kong's retail sales fell for a 20th month in October to
HK$36.1 billion ($4.65 billion), down 2.9 percent from a year
ago. The drop, however, narrowed from a 4 percent slide in
September and 10.5 percent fall in August. urn:newsml:reuters.com:*:nENNGBT0SL
Hong Kong's retail market is small in comparison to the
broader mainland market, but remains a barometer for luxury
spending as it has been a key hub for international brands.
"The big hole left by the mainland's big spenders is not
easy to fill by local consumption all of a sudden," said Linus
Yip, chief strategist at First Shanghai Securities. "Boosting
local consumption is among the things they can do and is within
their control for the time being."
To attract domestic buyers, Kerry Properties' 0683.HK
MegaBox mall in Kowloon has created a game zone that allows
shoppers to interact with festive props like a Christmas tree
using virtual and augmented reality.
The Wharf's 0004.HK Harbour City mall has resorted to
festive lighting in Tsimshatsui, while Sino Land's 0083.HK
Olympian City has launched a Christmas circus based on the
animation film "Madagascar" to lure family shoppers.
Sun Hung Kai Properties 0016.HK has set aside HK$38
million for promotional activities over Christmas across its 10
major shopping malls in the city, up 10 percent from a year ago.
"Apart from a loyalty and VIP programme, we have adjusted
our tenant mix and are adding more food and beverage variety to
draw in more local shoppers, while events including popular
animation characters attract families," said Fiona Chung,
general manager (Leasing) of Sun Hung Kai Real Estate Agency.
FEWER TOURISTS HURT SALES
The push to attract local buyers comes at a time of weak
tourist arrivals, which fell 2.4 percent from a year earlier in
October, according to the Hong Kong Tourism Board, bringing the
drop to 5.7 percent over the first ten months.
Mainland China visitors, who account for 75 percent of the
total, fell 3.5 percent in October.
Fewer tourist numbers were reflected in weak retail sales
for companies such as Swire Properties 1972.HK , which saw a
15.3 percent drop at The Mall in the Central business district
in Pacific Place over January to September. Tourist-dominated
Citygate Outlets on Lantau posted an 11.2 percent drop.
China's biggest jeweller Chow Tai Fook Jewellery 1929.HK ,
and smaller rival Luk Fook Holdings 0590.HK posted sharp drops
in fiscal first-half profit. urn:newsml:reuters.com:*:nL4N1DN363 urn:newsml:reuters.com:*:nL4N1DP1ZN
"We will continue to attract customers and boost local
consumption by enhancing product displays, cross promotional
campaigns and VIP promotional activities so as to improve sales
and profit," Luk Fook Chairman Wong Wai-sheung said.
($1 = 7.7553 Hong Kong dollars)
(Reporting by Donny Kwok; Editing by Himani Sarkar)
((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))
((Hong Kong's retail sales on Thursday, are set to show a fall for a 20th straight month in October.))
Keywords: HONGKONG RETAIL/MALLS