- Nearly 80 per cent of local retailers say rent is a challenge – with spaces in malls more expensive than ever
- Industry insider predicts double-digit drop in retail sales if political turmoil continues
Hong Kong's notoriously high rent is the biggest challenge for local retailers followed by manpower shortages that limit customer service, a new survey has found.
In the poll released on Monday by KPMG, the accounting and consulting firm, and the Hong Kong Retail Management Association, nearly 80 per cent of respondents from the city's crucial retail sector said astronomical rent levels were the hardest part of finding success in Hong Kong.
The joint study surveyed 281 local retailers who were based in the city during the first quarter of 2019.
Annie Tse Yau On-yee, the chairwoman of the retail association, said rent had long been a problem for local retailers and the available spaces in shopping malls had become even more expensive in recent years.
Hong Kong retailers feel the pinch as trade war, protests hurt sales
The study found that 79 per cent of those surveyed said affording rent was the main challenge to their business, followed by a lack of manpower at 53 per cent and staff turnover at 48 per cent.
Tse pointed out that the retail industry requires undesirable working hours, including on public holidays, which might be unfavourable to workers, particularly young people. She said this was a factor in the workforce shortage.
"Due to time constraints or when a worker has to perform multiple roles, then the quality of customer service would be affected," she said.
She continued that most of the respondents predicted that the manpower shortage could continue to tarnish customer service for the next two years.
Tse said other negative effects that were expected to emerge included slower or negative sales growth as well as lower employee morale and productivity.
The study found that 72 per cent of those surveyed said the most difficult roles to hire for were frontline customer service staff and by retail salespeople. Finding technical workers to support retail technologies was named as a challenge by 64 per cent of those polled.
Tse said there was a lack of technological talent in Hong Kong, including people with big data expertise, and that shortage would slow the development of the retail sector.
"When people talked about hiring (tech) colleagues, they said it was a big headache. There are a lot of vacancies but few people apply for the jobs," she said.
More than half of the respondents said they would consider expanding staff training and adopting a wider use of technology for the next two years.
Tse said new technologies could free employees from tedious work and allow them to take on more interesting tasks.
"To a worker, he or she would then feel more interested in staying with the company," she said.
The city's retail industry is also facing uncertainties from the US-China trade war and the recent extradition bill protests.
Local retail sales fell for the fourth straight month in May, posting a 1.3 per cent drop to HK$40 billion (US$5.1 billion) from 2018. In the first five months of 2019, the value of total retail sales in the city has decreased by 1.8 per cent compared with the same period last year.
On Monday afternoon, many shops around Yuen Long were closed after dozens of thugs dressed in white T-shirts descended into Yuen Long MTR station and attacked passengers and extradition bill protesters, especially those in black T-shirts. The violence left at least 45 injured, according to the Hospital Authority.
Tse said businesses in Yuen Long would be harmed because shops were forced to shut their doors. She predicted that the city's retail sales value would drop by double-digits this year if the political crisis continued.
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