Retail retailing in the cold winter, luxury stores continue to give up the core area shop, fearing that it is only the beginning of a larger retail contraction and the end of the business
The Hong Kong government can only reduce costs. To boost demand, the first priority is to quell the violent struggle as soon as possible so that the industry can have the basic conditions for rebirth.
Core area rentals frustrated luxury stores shrinking
A large chain of jewellery shops abandoned the underground shop in the most prosperous section of Tsim Sha Tsui. The monthly rent was about $1.2 million. The industry mainly re-leasing. The ground floor near the same area was originally rented for 1.2 million yuan and has recently dropped to 1 million yuan. There is also a cosmetics store in the same district, which only renews the short-term rent for about 4 months.
This first wave of contraction and the end of the tide, restaurants and luxury stores bear the brunt, because passengers, especially in the mainland, greatly reduced. According to the latest statistics from the Tourism Development Board, the number of visitors to Hong Kong in August decreased by 42.3% year-on-year, while that of non-Mainland visitors also fell by 24.5%. Businesses that mainly cater to tourists, and luxury shops that are popular after the popular travel, have all been greatly reduced.
What is even more terrifying is that in the past eleventh Golden Week, mainland visitors to Hong Kong fell by half to only 670,000, reflecting that the situation is still deteriorating, and that the violent clashes in the anti-reforms have not only seen a way out, but the level of violence has continued to rise. It is certain that Christmas is not prosperous in the peak season. I am afraid that the Lunar New Year is also difficult to escape. In the core shopping district, the most cost-effective way is to abandon the rent. Even if the owners are willing to reduce the rent, the short-term lease will also be Far from safety.
Of course, the situation is not one-sided. The non-core, especially the rental situation in the districts of the people’s livelihood, is generally stable. Some cases have increased rents by more than 30%. This reflects the fact that Hong Kong people always have the need for basic consumption. The core commercial areas of the hardest hit areas of violent conflicts, such as the main avenue of Yau Tsim Mong, are people who avoid it and spend more on the people’s livelihood.
Supporting enterprises is still difficult
However, as Hong Kong’s economy is heading for a recession, the consumption of Hong Kong people is also decreasing. As a result, overall retail sales are falling sharply. For example, the total value of retail sales in Hong Kong recorded a record year-on-year drop of 23% in August. The decline in luxury stores is likely to gradually appear in other types of stores, as well as non-core consumer areas.
As pointed out earlier in this column, the measures taken by the Hong Kong Government to support enterprises can only reduce the operating costs of enterprises and shops and cannot boost demand. Although the tourism and retail industries have been planning to promote Hong Kong overseas and provide large-scale consumer concessions to attract tourists to Hong Kong and even stimulate Hong Kong people to spend their own time, this can only be started after the violent conflict has subsided, otherwise the utility will only be effective. Will be like a mud cow into the sea, wasting money and time.
The sluggish consumption indicates that unemployment and the completion of the industry will come. To avoid a worse situation, the Hong Kong Government and the public must be pragmatic and try to compromise and quell the violent conflict so that Hong Kong can have opportunities for recovery.