Stores at prime locations report 50% plunge in sales during 'Golden Week'

Hong Kong's retail and service industries are paying dearly for the ongoing illegal protests on main roads in some of the city's busiest commercial districts.

Economic analysts have predicted that total retail sales in October will decline signficantly compared with a year ago, the first time since 2002. The fall is particularly galling to many retailers who have stocked up for the annual rush of mainland tourists during the National Day holidays in the first week of this month.

The Hong Kong Retail Management Association said the SAR's retail sales during the week from Oct 1 plunged by as much as 50 percent from the same period a year earlier. Smaller shops and boutiques were the hardest hit, it noted.

An analyst with Australia and New Zealand Banking Group (ANZ) said he believed the protests would cost Hong Kong retailers some HK$2.2 billion, or 6 percent of the month's total sales.

Sales of luxury goods, cosmetic products and consumer durables bore the brunt of the downturn. However, top-end stores and supermarkets were likely to have held up well, Raymond Yeung, economist at ANZ, wrote in a research note. The launch of the new Apple iPhone 6 also offered some additional support, it said.

Other sectors of the tourism and service industry, including hotel, transportation, logistic and insurance, may also see negative effects, according to a Credit Suisse report.

A Hong Kong Tourism Board spokesperson told China Daily the demonstrations at Admiralty, Central, Causeway Bay and Mong Kok, which are transportation hubs and home to many hotels and shops, have turned away potential visitors, especially those from the mainland. He said it's hard to say when they will change their minds and return.

A State Council think tank will study the economic impact of the "Occupy Central" campaign on Hong Kong with the key focus on whether the protests have fundamentally shifted investor perceptions, a source said.

Sam Cheuk, president of The Hong Kong General Chamber of Jewellery, told China Daily the demonstrations have significantly affected tourist shopping sentiment.

"Our members told me that during the 'Golden Week', the average spending of mainland shoppers fell by 30 to 50 percent," he said, adding that total sales during the week are expected to drop by 30 percent compared with a year earlier.

Although local gold and jewelry retailers are disappointed by the sales, they're confident about the longer-term future.

"Most of our members believe the protests won't last a very long time. When they end, everything should return to normal," he said.

Many retail outlets, including cosmetics and drug stores, which used to be packed with mainland shoppers during the National Day break, were also feeling the pinch. Salespersons at three out of five cosmetic stores in Causeway Bay reported a significant drop in the number of mainland customers compared with last year.

One saleswoman at a souvenir store at the junction of Fleming Road and Thomson Road in Wan Chai told China Daily she had not seen a single mainland visitor at her store in the past week.

The owner of a herbal tea shop chain said sales had dropped by about 20 percent at the Wan Chai outlet and 50 percent at another of the chain's stores in Central.

"The protests almost cut off tourist traffic to both outlets," she said. "Considering the high rents I'm paying for those premises, it did occur to me that, perhaps, it would make better business sense to just close them down," she said.

Contact the writers at sophiehe@chinadailyhk.com and selena@chinadailyhk.com

Hong Kong's tourism industry has been hard hit by the ongoing protests, witnessing a slide in the number of tourists since the "Occupy" campaign began. Popular tourist attractions like Hong Kong Disneyland (above) and Ocean Park (below) have reported a drop in visitors, particularly from the mainland.  Provided tO China Daily

(HK Edition 10/09/2014 page8)