It is no secret that Hong Kong has been dealing with an endless stream of protests in recent months, but many people do not realize the impact that these protests have had on retail there.

Direct Results on Retail

There are several critical ways that the Hong Kong Protests have directly affected retail in a negative manner. Tourists are hesitant to visit the country, leading to a decrease in spending by that group of people. Tourists are not the only group discouraged, as locals are also hesitant to engage in their typical consumerist behaviors, given the violence and unpredictable situation. Additionally, the large number of crowds that frequently include violence have forced businesses, including retail stores, to close for several days at a time.

Figures

Based on the October figures from retail in Hong Kong, this was the steepest fall in sales on record. In October, retail sales dropped by 24.3 percent compared to one year earlier. By comparison, revised figures indicated that September saw an 18.2 percent drop from the previous year, and August saw a 23 percent fall.

Not only did October show the steepest drop in sales, but it was also the ninth month in a row that Hong Kong saw declining sales, dropping down to $3.85 billion (HK$30.1 billion). The October drop in retail volume compared to last year was also more significant than the revised figure for September, 26.2 compared to 20.3 percent.

In terms of tourism, the Hong Kong Tourism Board indicated that October arrivals of tourists dropped to 3.31 million, falling 43.7 percent. In September, the drop was 34.2 percent. 76.1 percent of this total was from mainland visitors. Mainland visitors fell 45.9 percent in October. This last figure is vital as many of the luxury retailers in Hong Kong heavily rely on spending of those visiting from mainland China.

There is also data on specific categories. On-year sales of clocks, valuable gifts, watches, and jewelry dropped 42.9 percent in October. Department store sales fell 31.1 percent, and cosmetic and medicine sales fell 33.5 percent.

Market Analysts Are Not Optimistic

For now, market analysts have little optimism that retail figures in Hong Kong will improve anytime soon. For now, the protests are overshadowing the retail outlook, as their continuation will directly translate into more time with stores closed and less spending. Additionally, the Chinese yuan is weak at the moment, which further decreases spending.

The retail situation is so severe in Hong Kong that the Hong Kong Retail Management Association encouraged landlords to cut the rent in half for six months. This could help reduce the risk of retailers closing completely or firing employees.

Source:

https://www.cnbc.com/2019/12/03/hong-kong-retail-sales-post-worst-slump-on-record-as-protests-take-toll.html

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