In the throes of a global economic crisis, we are in a time when "less worse" is almost as good as "better", and, in that spirit, the city's retail sector may have something to cheer about, even if only softly.
The city's retail sales in June declined a comparatively small 4.8 percent by value from a year earlier, for the smallest decline since April, as bullish asset market and a stabilizing economic outlook bolstered consumer confidence. Retail sales by value dropped to HK$21.1 billion, in contrast to the 6.2 percent drop in May to HK$21.6 billion, the government reported on its website.
If declining sales weren't bad enough, retailers have been hit with a double-whammy. Besides falling sales, which began to slide in February from a year earlier, climbing rents have taken a heavy toll.
Case in point: Crocodile Garments Ltd, a Hong Kong retail clothing chain, is said to be facing shutting half its local stores, with high rents as a likely culprit spurring losses, while Hong Kong-based fashion retailer Bauhaus International (Holdings) Limited said that because of surging rents, it won't expand in the city.
Factors underlying current demand - such as recovering consumer confidence and improved employment, equities and property markets - are, according to analysts, driving the "less worse" trend. "It's better than I expected. The drop in demand is beginning to narrow," senior economist of Bank of East Asia Paul Tang said, "I think we're seeing a positive wealth effect here: rising asset markets, not just equities, but property as well, are boosting consumer confidence. Unemployment has also been rising more slowly in the past few months and that's another encouraging sign."
Moreover, there are glimmers of a nascent retail recovery in another Asian powerhouse, Singapore. "The worst of the economic contraction is behind us," said Song Seng-Wun, regional economist at CIMB-GK Securities in Singapore.
By volume, retail sales fell 4.2 percent in June from a year earlier which rose by 0.4 percent seasonally adjusted from the proceeding three months. The volume of sales in May surged 6.4 percent.
