Hong Kong still the place to be for retailers

Consumer sentiment has been more positive in Hong Kong than the UK despite the volatile economic climate, as a year-on-year increase in shopper visits is recorded in Hong Kong since September this year, according to the latest figures from Experian® company FootFall. October indicated a rise of 6.6% in shopper numbers in Hong Kong whereas a decline of 2.2% in the UK compared with the same month last year. The continual upward footfall trends in Hong Kong are set to continue in the run-up to Christmas.

Experian Hong Kong FootFall Index:
Year-on-year change (October 2008 vs October 2007): + 6.6%
Year-on-year change (September 2008 vs September 2007): + 8.0%

Experian UK FootFall Index:

Year-on-year change (October 2008 vs October 2007): - 2.2%

Year-on-year change (September 2008 vs September 2007): - 0.9%

The figures are taken from Experian's Hong Kong FootFall Index (FI) and the UK FI, which measure the change in visitor numbers to shopping centres in Hong Kong and the UK respectively.

The optimistic retail outlook in Hong Kong is also reflected in the figures for the 12 weeks period from September 1 to November 23 with shopper numbers up by an average of 7.1% per week over the corresponding period in 2007.

“Looking at the footfall analysis by location, a perceptible decline in consumer sentiment driven by the global credit crunch and escalating fears of a global economic recession already surfaced in the UK as we could tell from the sixth year-on-year monthly drop in shopper traffic in October. Hong Kong had relatively much better show in shopping centres with shopper numbers increasing 12 weeks in row since September and exceeding the September and October footfall levels last year,” said Yannick Kennel, Director, FootFall of Experian Asia Pacific.

“The impacts the global financial climate is now posing in the Asian retail market are more on consumers' psychological thinking rather than their actual spending power, and thereby have not changed the traditional shopping habits in the region. In Hong Kong, retail sales in September remained optimistic with sales value increasing by 6.9% and sales volume by 1.8% over a year earlier. It is, therefore, not surprising to see the high turnover in shopping centres.”

Exceptional year

According to Experian's Hong Kong FI, the year 2008 has proven to be an exceptional year for retailers in Hong Kong with footfall figures for the year-to-date up 5.7% over 2007, which is also an extremely prosperous year for the retail industry.

“The growth in shopper numbers in Hong Kong enjoyed by retailers since September is expected to continue to Christmas but in a moderate degree. We are already seeing a slowdown in the retail market growth as the double-digital increase in both sales value and volume in March gradually shifted to a single-digital rise in September. While shoppers are coming out in greater numbers this year, their festive spending will be less than last year in terms of both sales value and volume,” said Yannick.

With one month away from Christmas, Yannick advised local retailers to capitalise on the upbeat consumer sentiment and get prepared for the peak shopping season in December. Apart from more promotions and better packages, offerings with lower entry price points are key to appeal price-conscious consumers. Retailers are able to finish this year on a positive note with the right products.

Commenting on the local retail outlook for 2009, Yannick believed the knock-on effects of the global financial crisis will begin to be reflected in the local market after the Chinese New Year next year, which means a tougher year 2009 for retailers.

Table 1: Year-on-Year Comparison for the Weekly Shopper Numbers of Experian's Hong Kong FootFall Index

Table 2: Experian Hong Kong FootFall Index from Year 2006 to Year 2008

Table 3: Experian UK FootFall Index from Year 2006 to Year 2008

Source: Footfall
The FootFall Index gives a true representation of the change in visitor numbers to shopping centres. The FI is created to allow the retail and retail property industries to access week-on-week, month-on-month and year-on-year changes in the shopper numbers on a percentage basis.