The social movement lasted for nearly half a year, and the retail industry was in the “cold winter period”
According to the Census and Statistics Department yesterday, the total value of retail sales in November 2019 was about HK $ 30 billion, a year-on-year decrease of about 24%. In addition to a 10-month decline, it also recorded a double-digit decline for five consecutive months. In the first half of 2019, the retail sales value base was very high, coupled with the lack of festive effects and the uncertain development of social events, the author estimates that the total sales value will continue to fall in the first half of this year, a decline of about 10% to 20%.
Analyzed from the highest to the lowest value of retail sales by major categories, the sales value of “Electrical Appliances and Other Unclassified Durable Consumer Goods” decreased by approximately 19% year-on-year; followed by the “Department Store Goods” by approximately 23%; “Jewelry “Jewellery, watches, and valuable gifts” fell by about 44% year-on-year, becoming the hardest hit area. A small number of commodities rose against the market. For example, “supermarket goods” rose by about 3%, and “fuel” rose by about 11%.
The decline in the value of total retail sales in November 2019 was actually similar to that in October, mainly due to the heating up of social events in November
The situation was even more severe than in October, and the shopping malls even had to suspend business. It is estimated that the sales situation in the first half of this year is still not optimistic because the base value of total sales in the first half of 2019 is very high, plus the Chinese New Year in January this year, only Valentine’s Day can drive the retail market thereafter. However, since March is the off-season of the traditional retail industry, and the development of social events is uncertain, it is estimated that many businesses, especially the catering industry, may consider layoffs or closures after the new year, which may also push up the unemployment rate. Therefore, the total retail sales value in the first half of the year is expected down.
The author expects that the short-term prospects of the retail industry will continue to depend on how local social events develop
The retail market continued to deteriorate, and rents in major shopping districts also affected. For example, a half-year-old ground floor shop at Percival Street in Causeway Bay was leased out for only about 160,000 yuan per month, which was a significant drop from the previous rent by nearly 65%, and the transaction price was as low as 160 yuan.
In addition, a double-floor ground shop on Russell Street in the same district, with an area of about 3,000 square feet, was leased to a chain of jewellery and gold shops for about 1.3 million yuan a month a few months ago, and it was delivered last month. However, the new tenants decided to postpone the renovation work until the Lunar New Year due to the unstable market conditions in recent months. It is estimated that the tenants lost at least one month of rent.
However, commercial tenants of fitness centers have been on the rise in recent years. According to the data, the core area has three floors on the ground floor, the first floor and the second floor of the commercial property on Queen’s Road Central, Central. It has been pre-leased by this type of company for more than 1.71 million yuan per month for a period of four years, with a transaction price of about 76 yuan per square foot.
The author believes that Hong Kong is currently facing domestic and foreign crisis. Due to the slowdown of external economic growth and geopolitical influences, I believe that Hong Kong ’s prospects this year are full of instability and uncertainty, and will also affect Hong Kong ’s export performance, such as the rising political situation in the Middle East and Brexit Waiting, not Hong Kong can change; coupled with social instability will continue to hit the economy, unemployment will rise and the economy will be bad. Hong Kong’s economy is entering a recession. Total retail, restaurant and hotel revenues have all fallen. Among them, the hotel occupancy rate in November 2019 was only 66%, a year-on-year decline of 30%, the worst since SARS in 2003. The volume of retail sales in October and November last year fell by about 24% year-on-year, the largest on record.
From another perspective, although the retail industry in Hong Kong is expected to face pressure in 2020, the retail industry is expected to gradually enter the “new normal”. Consumption power and consumer sentiment are affected by social instability. Traditional retail hotspots in major shopping areas such as Central, Causeway Bay, Tsim Sha Tsui and Mong Kok are facing serious challenges; coupled with the large transportation system and road conditions, access to the public is affected In order to avoid traffic jams, citizens will choose to stay in the community for consumption. Therefore, the regional malls and people’s livelihood stores that provide the citizens’ life are relatively stable under the current social conditions; coupled with the fact that the public is more cautious about consumption, but because of the social atmosphere, they tend to complement the small shops in the area and non-core retail areas. Stores have seen new sales in the past few months.
If the market development direction continues, in the future, retailers’ strategies for investing in opening stores may gradually be concentrated in the main shopping areas in the past and then dispersed into non-core retail areas. Based on the above analysis, we believe that under the current circumstances, the role of regional shopping malls will be re-emphasized to promote the future development of the “community life circle”. Overall, the author estimates that street shop rents will be adjusted downward by another 15% this year.