The Occupy Central protests cut deeply into retailers’ sales during Golden Week, the Hong Kong Retail Management Association (HKRMA) said on Monday night.
Fashion retailers saw sales fall between 30% and 50% from the same period last year, while department stores and supermarkets saw declines of 10% to 60% and small- and medium-sized enterprises up to 80%.
“We are very disappointed at the sales results. For retailers it is difficult to operate with a 30% drop in sales on a continuing basis,” Caroline Mak, chairman of the HKRMA, told reporters on a telephone conference call. HKRMA is one of Hong Kong's main industry lobby groups.
Tourism and retail account for 10% of Hong Kong’s GDP and Golden Week is traditionally a period when mainland shoppers flood into Hong Kong to pick up goods, especially luxury items.
Mong Kok and Causeway Bay, especially, are home to a multitude of retailers, including high-end fashion stores such as Prada and Louis Vuitton, jewellers such as Chow Tai Fook, department stores and chain stores.
However, the tens of thousands of pro-democracy protesters who took to the streets last week barricaded key roads and paralysed large swathes of Hong Kong and Kowloon.
The week was punctuated by sporadic violence, especially in the key Kowloon shopping district of Mong Kok, as suspected Triads attacked protesters and journalists.
Some retailers were forced to tape up their windows, pull down shutters or close completely, although many stayed open as long as they could.
“We don’t feel safe but we have to stay. We are on duty,” a shop assistant at a watch retailer in Mong Kok told FinanceAsia on Sunday. She said they closed the shutters whenever fighting erupted.
By area
Fashion retailers in Central and Admiralty saw 50% falls in sales, Causeway Bay 15% and those in Mong Kok between 30% and 40%. Jeweller sales in Central and Admiralty fell 35% to 45%, in Causeway Bay by 28% to 40% and in Mong Kok by 33% to 55%.
Meanwhile, department stores, supermarkets and pharmacies saw sales fall by 20% to 35% in Central and Admiralty, 30% to 45% in Causeway Bay and 10% to 25% in Mong Kok, where there were also cases of 60% falls, the HKRMA said.
Fast food outlets also saw sales wither, perhaps surprisingly. They dropped 40% in Central and Admiralty, 30% in Causeway Bay and by 25% in Tsim Sha Tsui (TST), southern Kowloon.
“By and large people in Hong Kong are rational, whatever their beliefs. But no-one [here] has ever faced these challenges,” Mak said.
Uneasy peace
The protests had thinned out on Monday night, with about 100 people occupying a section of Nathan Road in Mong Kok, 500 outside government headquarters in Admiralty and 50 to 80 in Causeway Bay.
Hong Kong's government appears to have retreated from an earlier threat of force after protesters in Admiralty opened barricades to allow officials to enter work on Monday morning.
Late on Monday night it emerged that talks between students and the Hong Kong government on political reform could start this week but it remains unclear what the next move is for either side.
In spite of the dwindling crowds on the streets, Mak said she did not think things were back to normal and she had advised retailers to seek legal advice if they wanted to recoup lost sales.
“Some [retailers] say yes, some say no. But it is very difficult,” she said.
The poor retail sales will do little to quell increasing anger among some Hong Kong residents unhappy at the level of disruption caused by the protesters.
As last week progressed, a growing number of Hong Kongers began shouting at groups of protesters, accusing them of ruining transport links and threatening livelihoods.
“I talked to a lot of retailers and they were extremely professional and understanding. They still stayed open until things got tense. This reflects how professional they are,” Mak said.
Downward trend
That may have as much to do with the downward trend in retail sales seen in prior months than mere understanding, with drops of 3.9%, 6.9% and 3.2% in May, June and July, respectively. But then sales did recover by 3.4% in August.
Compounding the problem has been a decline in the average spend of mainland tourists in Hong Kong this year as China’s economy continues to slow, which Mak said explains the falling retail sales in the city throughout the year.
It is clear, therefore, that an already poor year has been made harder, which does not bode well for the city’s economy, which relies in no small part on consumer confidence.
That said, Daiwa Capital Markets on Monday re-affirmed its GDP growth targets for the city – 1.9% for the third quarter and 1.8% for the fourth quarter.
Furthermore, Fitch Ratings reiterated that it did not expect the protests to affect Hong Kong’s sovereign ratings in the short term.
Nonetheless, the question of governance could still affect credit fundamentals over the longer term, according to a research note from Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch.
This question of governance is what keeps the protesters out each day and night.
“We don’t know how long it will go on for in Hong Kong,” said Mak. “But it is definitely negative for shopper sentiment.
