- Hong Kong's retailers are likely to miss out on the five-day golden week holiday sales bonanza in early October as mainland tourists stay away
- A local employment agency says up to 30 per cent of the city's retailers are now asking full-time employees to go on unpaid leave
Several dozen small retailers are likely to shut shop as soon as the end of this month due to plunging sales that could lead to thousands of lay-offs as protests frighten away tourists, according to a Hong Kong-based staffing agency.
"It is just too hard to survive," said Alexa Chow Yee-ping, managing director of AMAC Human Resources Consultants, adding that retail chains were trying their best to keep permanent staff despite the gloomy scene.
About 20 per cent to 30 per cent of retailers were now starting to send full-time employees on unpaid leave to cut costs after having let go of part-time workers.
And although the upcoming five-day "golden week" national day holiday starting on October 1 is generally a busy sales period, retailers could miss out as the city is unlikely to see a repeat of the 1.2 million mainland tourists who visited Hong Kong last year.
Since June 9, Hong Kong has been hit by protests, ignited by the now-withdrawn extradition bill. The hardest hit retailers are in Causeway Bay as the nearby Victoria Park is the rallying point for most of the protests.
The protesters have also organised demonstrations in other shopping districts such as Tsim Sha Tsui and Mong Kok, and arranged an online campaign called "Bye Buy Day HK", urging citizens to spend less on Fridays and Sundays and avoid retailers and other companies which do not share their political views.
In August, tourists to Hong Kong declined nearly 40 per cent " the second biggest year-on-year slump since the Sars epidemic in May 2003, Financial Secretary Paul Chan Mo-po wrote in a blog post on Sunday.
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Lukfook Group, a listed Hong Kong jeweller which has nearly 50 branches in the city, said that it has no plan to reduce staffing level or make staff go on unpaid leave.
Nancy Wong, executive director and deputy CEO of Lukfook, however, said that the luxury retailer had seen a "significant drop" in daily footfall, but declined to provide figures.
She added that branches in locations with large-scale public events have been closing early.
Retail sales in July fell 13 per cent from a year earlier, according to the latest figures from the Hong Kong government.
In view of the retail sector's dire situation, the Hong Kong Retail Management Association last month called on landlords to cut rent by half for six months to help businesses tide over the crisis.
But AMAC's Chow said that landlords might not be amenable to such a request.
Chow Tai Fook, the world's largest listed jeweller by market value, said it was "actively looking for cut on rental renewals".
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"In light of the cautious consumer sentiment amid the current market uncertainties, we are reviewing the profitability of our stores," the company said.
Joseph Ho Shiu-chung, chief supervisor of The Cosmetic and Perfumery Association of Hong Kong, which has more than 300 members that include 15 multinational companies, said that the beauty industry has no plan to collectively call for rent cuts despite plunging sales.
Cosmetics sales are estimated to have dropped by about 40 per cent in the city's popular tourist shopping areas since the civil unrest started, he said.
"There's no way people would buy lipsticks when there's tear gas and fire on the next street," said Ho.
He said that some leading cosmetics retailers have started to cancel promotional events and have asked some staff to take no-pay leave to cut costs, but declined to name the companies.
Dismissing front line staff will be retailers' last resort to cut costs since companies do not want to deal a blow to the morale of their staff, Ho said.
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