Hong Kong felt the brunt of downward pressure from a slowdown in luxury purchases by Chinese tourists, as the annual Golden Week holiday saw wallets closing rather than opening.
Bloomberg reported that China’s slowdown is showing on shoppers’ acquisitions as mainland vacationers hit the Hong Kong boutiques less determinedly than in 2011. Fewer sales could further slow the Hong Kong economy, already down 0.1% from the previous quarter as exports shrink.
Joseph Tung, executive director of the Travel Industry Council, said in the report that it looks as if sales will be down at least 10% over last year’s holiday—this in spite of the fact that more tourists are pouring into Hong Kong during the eight-day travel and shopping holiday.
Luxury brands that opened new shops in the city picked a bad time to expand, with retailers such as Britain’s Burberry Group and Hangdeli Holdings, a high-end watch seller, feeling the pinch.
“The number of big-ticket [holiday spending] transactions has shrunk,” according to CCB International Securities analyst Forrest Chan, who said in the report, “Fewer people will spend several hundred thousand bucks for a luxury watch. The macroeconomic situation is dreadful.”
Although Bloomberg estimated that the number of tourists from the Chinese mainland was up 6% over last year, to 412,501 on the first three days of October, sales did not follow. Tung estimated that receipts were averaging HK$5,000 ($645) to HK$6,000, instead of last year’s HK$7,000 to HK$8,000.
“Golden Week sales this year so far are more or less the same as last year,” said Joseph Chu in the report. Chu is an executive director of Prince Jewellery & Watch, a company with 13 stores in Hong Kong. “The number of mainland shoppers didn’t decrease but the average spending of each visitor has dropped.” He added that this year’s average bill for Chinese customers was about HK$60,000; last year it was HK$80,000.
Chan pointed out that “[s]ome of the jewelry sellers in Hong Kong have posted negative growth in same-store sales since July.” He added, “This trend is very likely to continue through the Golden Week.”