Shoppers return but Hong Kong retail and F&B sectors yet to recover

Hong Kong's retail sales shrank 23.1 per cent year on year in July. - Reuters

HONG KONG (The Straits Times/ANN): Hongkongers have gone on a spending spree after two months of being cooped up at home, although it's not clear if this will be enough of a lifeline to the city's retail, and food and beverage (F&B) sectors, which remain among the worst hit by the Covid-19 pandemic.

Sales at K11 Musea, located in Tsim Sha Tsui, jumped by a factor of seven last weekend compared with two weeks ago before the gradual easing of anti-pandemic measures.

Adrian Cheng, chief executive of New World Development and founder of K11 Group, attributed the spike to consumers' pent-up appetite, as well as moves by the group to target frequent customers.

For the three months ended June, sales turnover at K11 shopping malls in the mainland soared 85 per cent quarter on quarter, while K11 Musea in Hong Kong was up 35 per cent.

Together with tenants, the group created a digital ecosystem where it ran multiple live-streaming events on popular social media platforms. including WeChat, as well as used virtual reality (VR) technology to help consumers buy works of art.

For July and August, the online sales channels accounted for 15 per cent of total sales in K11 malls in Hong Kong.

Cheng said: "As we enter the new normal, we're seeing a new drive for 'experiential consumption' -- consumers who crave immersive shopping experiences that are exclusive, bespoke experiences and offer curated content and products."

Consumer May Lai, 45, says her spending on shopping has gone down this year because she prefers going to physical stores.

But, with public gatherings now capped at four and the Mid-Autumn Festival on Oct 1, she has plans to venture out more.

"My husband and I have been going out these few weeks as we've not been out for such a long time but it's not as frequent as before Covid-19.

"Still, we want to play hard and spend hard. In the past few months, we have done less shopping, so we are now spending more these two weeks."

Eateries though are not expecting a windfall during the Mid-Autumn festival despite the easing of restrictions. Typically, the festival is a time when families hold big celebrations.

"The festival will not be of much help to restaurants as sales of mooncakes have been slow and bookings for tables have not been like in the past. There are no tourists and the ban on gatherings of not more than four people remains, so all these will impact on spending by families and companies," said Kwok Wang Hing, chairman of the Eating Establishment Employees General Union.

ING chief economist for Greater China Iris Pang believes businesses may not pick up as restrictions had not been loosened further.

She added that if landlords were expecting a loosening of social distancing measures soon "then there may not be a lot of room for rent negotiation". High rent has been a key concern of businesses in the city.

Tourism, hospitality, retail and the F&B sectors have been hit the hardest so far.

Dragged down by the third wave of the pandemic, Hong Kong's retail sales shrank 23.1 per cent year on year in July, making it the 18th straight month of contraction.

Consumer spending dropped to HK$26.5 billion (S$4.7 billion) the same month, contributing to the 32.1 per cent fall in sales for the first seven months of the year compared with the same period in 2019, government data showed.

In mid-August, the government revised its full-year growth forecast to an unprecedented low range of minus 6 to minus 8 per cent.

The unemployment rate has remained at 6.1 per cent for the three months as at end-August, data last week showed, as consumption- and tourism-related sectors including retail and accommodation were battered the most by Covid-19.

These sectors recorded a combined unemployment rate of 10.9 per cent for three months from June, the highest since the severe acute respiratory syndrome (Sars) outbreak in 2003.

This is despite the government having rolled out an unprecedented stimulus package amounting to more than HK$300 billion as a lifeline to businesses and residents in the form of subsidies and cash handouts.

Various sector heads have recently again urged the government to do more to help businesses retain employees as the pandemic drags on. - The Straits Times/Asia News Network