hong kong retail industry

Topics: Price index, Retailing, Inflation Pages: 7 (1195 words) Published: June 20, 2014

Trends in the retail industry

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.

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:
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...
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