I) Retail sales: overview
For the period January-April overall retail sales have increased by 0,7% in 2014 (from HK$172,3m to HK$173, 5m): The small increase in retail sales in mainly due to the 14,3% growth rate that occurred in January 2014. For three consecutive months retails sales have experienced negative growth with a peak of -9.8% in April 2014 as shown in the graph below.
Retail Sales January-April 2013-2014 (in HK$ Bn)
While there seems to be a negative trend on retail sales, the 2 following graphs emphasize on where the decline is coming from
II) Retail sales by outlets
Growth of retail outlets sales: January-April 2013/14
On a January-April Year to Year comparison:
Jewelry, watches, clocks saw a 12% decrease in retail sales. It accounts in 2014 for 21% of total retail sales in comparison to 24% in 2013. consumer durable goods saw a 2,3% decrease in retail sales. It accounts in 2014 for 17,2% of total retail sales in comparison to 17,7% in 2013. Clothing, footwear saw a 9% increase in retail sales. It accounts in 2014 for 14% of total retail sales in comparison to 13% in 2013. Other consumer goods saw a 7,6% increase in retail sales. It accounts in 2014 for 19% of total retail sales in comparison to 17,7% in 2013.
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This paper presents the applications of Information Technology in retailing. The retail market is a state of exponential growth. Retailing includes all the activities involved in selling goods or services for the final consumer. These activities include demand and sales forecasting, inventory management, store management, transportation etc. This paper focused on how Information Technology may be ...
Growth of retail outlets: Y-Y April 2013-14
When only taking into account the month of April on a Year to Year comparison: Jewelry, watches, clocks saw a 40% decrease in retail sales confirming the negative trend seen between January-April Consumer durable goods saw a 6,5% decrease confirming the negative trend seen between January-April Clothing, footwear saw an increase of 12% confirming the positive trend observed between January-April.
a) Negative growth rate of Jewelry, clocks and watches
The negative trend seen for Jewelry, clocks and watches can be explained by the following: According to Bloomberg and Business Week, Chinese customers are facing slower economic growth and thus shift their consumption towards necessity goods.
According to Secretary for Financial Services and the Treasury Professor Chan Ka-keung decrease in retail sales for luxury goods is mainly due to the macroeconomic environment (slowdown of the mainland economy and change in consumer habits)
These two sources explain the increase in other consumer goods retail sales (+7, 6%) when comparing January-April 2013-14. More specifically, the positive trend is shown through an increase in: Optical retail sales:+12%
Medicine, cosmetics: +8.8%
However, a study released by Price Water Cooper in 2012 on the “2013 outlook for the retail and consumer products sector in Asia” stated that: The future steady economic growth will drive local demand back towards luxury goods and away from utilitarian goods. Absence of sales taxes keeps the prices for luxury goods lower than in most other countries
b) Negative growth rate of Consumer durable goods
Growth of Consumer durable goods: Y-Y January-April 2013/14
On a January-April Year to Year comparison:
The Business plan on Consumer Durables Industry Analysis
Consumer durable goods consist of products that are often expensive for the average household, and that are usually expected to last for two or three years. These goods are often purchased as gifts on a seasonal basis or for special occasions. The category includes but is not limited to: recreational goods, sporting equipment, toys and hobby goods, jewelry, watches, kitchenware and other durable ...
Other consumer goods saw a 18,1% in retail sales, however it is mainly due to January as for three consecutive months retail sales have been declining as suggests the following table:
Jan 14
Feb 14
Mar 14
Apr 14
Jan-Apr 14
Other consumer durable goods
90.5%
(19.3%)
(23.0%)
(22.2%)
18.1%
Note: Other consumer durable goods include:
Retail outlets selling musical instruments, computers and peripheral units, computer software, medical goods, office appliances and equipment (except computers, furniture and fixtures), scientific and professional instruments, sewing machines and parts.
Electrical goods and photographic equipment decreased by 15%. It accounts in 2014 for 41% of total Consumer durable sales in comparison to 47% in 2013. Decline in Electrical goods and photographic equipment has been steady as suggests the following table:
Jan 14
Feb 14
Mar 14
Apr 14
Jan-Apr 14
Electrical goods and photographic equipment
(18.2%)
(16.0%)
(15.6%)
(8.3%)
(14.9%)
To see where the decrease in consumer durable goods sales is coming from, 2 variables need to be studied: The number of consumer durable goods sold ( number of units sold) The Price of consumer durable goods
Regarding price change, the CPI (consumer price index) index for durable goods suggests that price levels have continuously decreased on Y-Y comparison between January-April 2013/2014:
Data provided suggests that price level of durable goods has indeed decreased which partly stems the drop in retail sales. Regarding the number of consumer durable goods sold, 32,5% of retail sales value comes from incoming visitors ( in 2012) while 67,5% comes from local residents. My next point aims to see the correlation between decline in retail sales and the decline in incoming visitors.
III) Growth rate of incoming visitors
The following table provides a clear relationship between the number of visitors that come to Hong Kong and the evolution of retail sales.
Jan Apr 14
Jan Apr 13/14
Growth of visitors
(17.9%)
14.2%
Retail sales growth
(28.8%)
0.7%
If we consider the period between January and April in 2014 the number of visitors decreased by 18% and is correlated with a decrease in retail sales of 28,8%. If we compare 2014 to 2013, number of visitors coming to Hong Kong has increased by 14,2%. Retail sales increases a bit over the same period by 0,7%. While we already saw that retail sales are disappointing because of consumption shifts and slow economic growth, evidence suggests that the slowdown in visitors also explains the negative trend of the retail market. In addition to that, world research institute Savills reacted to the news that Chief executive Leung Chun-ying is considering limiting the number tourist’s arrivals (cut visas by 20%); by predicting that such measure would negatively impact retail by sales by 5% ($25Bn).
The Essay on Hong Kong theme park Analysis
1. Introduction Theme Park is an entertainment venue that includes rides, restaurants, activities, and attractions, woven around a theme such as celebrity or characters. Therefore, Hong Kong has a pair of theme parks which are Hong Kong Disneyland (an international famous theme park) and Ocean Park (a recreational, educational, home-growth theme park). Both of the theme parks have attracted about ...
Summary on consumer durable products (CDP) retail sales January-April 13/14
Looking at visitors and local residents sales:
Regarding Price/unit
the CPI index indicates us that prices decreased by 3.1% (in terms of CPI index change):
Regarding volume
Number of visitors increased by 14,2% and number of local residents keeps increasing Overall volume index for CDP has increased by 39%
It therefore seems that the decline in CDP retail sales is explained by a decrease in the price level. (In addition to that, the pace at which number of units sold has increased was not high enough to compensate for the decline in the price level. Therefore: Either, number of visitors and residents needs to increase at a faster pace Either, number of goods bought/visitor and resident needs to increase at a faster pace.): Hypothesis: still needs to be backed up with numbers
Sources
Newspaper articles
http://www.businessweek.com/news/2014-06-02/hong-kong-rents-hurt-by-china-tourist-curbs-real-estate#p1 http://www.bloomberg.com/news/2014-06-02/hong-kong-rents-hurt-by-china-touris
t-curbs-real-estate.html http://www.scmp.com/news/hong-kong/article/1524898/drop-retail-sales-biggest-five-years-surge-number-mainland-visitors http://www.scmp.com/business/economy/article/1519194/rise-hong-kong-consumer-confidence-fails-lift-retail-sales http://hongkongbusiness.hk/retail
Hong Kong retail industry studies
Government official statistics on retail sales http://www.censtatd.gov.hk/hkstat/sub/sp320.jsp?productCode=B1080003 Reports for 2012, 2013 and 2014
The Essay on Is Hong Kong Still a Shoppers’ Paradise?
In the past decade, Hong Kong has been well known for its duty free and wide range of goods, it allows people from the world have a fantastic shopping experience. However, more news reporting the negative images of Hong Kong tourism which adversely affects the image of “shoppers’ paradise”, are arisen. While numerous tourists can be seen in tourist spots in Hong Kong, some contend that they no ...
Government analysis on Hong Kong 2014 retail market
http://hong-kong-economy-research.hktdc.com/business-news/article/Market-Environment/Economic-and-Trade-Information-on-Hong-Kong/etihk/en/1/1X000000/1X09OVUL.htm Hong Kong Tourism Board statistics on visitors http://partnernet.hktb.com/en/research_statistics/latest_statistics/index.html Reports for January, February, March and April 2013-2014
2013 Price Waterhouse Coopers study on Asian retail industry http://www.pwchk.com/webmedia/doc/634973856882950813_rc_ap_products_outlook_2013.pdf 2013 IFC mall study on Hong Kong retail market 2013
http://www.fccihk.com/files/dpt_image/4_events/eflyer/Event2013/131126_KarimAzar/French%20Chamber%20of%20Commerce_26%20Nov%202013.pdf 2013 Savills Worldwide Research on Hong Kong retail market February 2014 CPI reports on retail sales
http://www.censtatd.gov.hk/press_release/pressReleaseDetail.jsp?charsetID=1&pressRID=3436 Reports for January, February, March and April 2013-2014
http://pdf.savills.asia/asia-pacific-research/hong-kong-research/hong-kong-retail/ret02-2014.pdf
