Retailing in Hong Kong, China
Euromonitor International's Retailing in Hong Kong, China report offers insight into key trends and developments affecting the industry. The report examines all retail channels to provide sector insight. Channels include department stores, food retailers, health and beauty retailers, clothing and footwear retailers, home furniture and household goods retailers, durable goods retailers, and leisure and personal goods retailers. There are profiles of leading retailers, with analysis of their performance and the challenges they face. There is also analysis of alternative selling channels (kiosks, homeshopping, internet retailing, service stations, vending and direct selling, as available).
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Chapters: 12 | Tables: 78 | Publication date: Dec 2006
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- Get insight into trends in market performance
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Executive summary
Individual travel scheme sparked off a rebound in retailing
In July 2003, China relaxed its immigration policy allowing its citizens to travel to Hong Kong on an individual scheme. This led to an influx of tourists from the mainland visiting Hong Kong, most of whom did so for a shopping spree. The strong tourist expenditure triggered a rebound in Hong Kong’s retail market. At the same time, improvement in the local economy and falling unemployment fuelled higher consumer spending, contributing to a further rise in retail sales. Retailing grew by over 3% in current value terms in 2005.
A fashion centre and a launching pad into the Chinese market
The revival of the retail market spurred a wave of expansion by local and international retailers who opened new stores or increased the number of outlets to tap the tourist expenditure. Retailers and landlords of shopping centres renovated and refurbished their stores to create a more exciting shopping ambience. Youth-oriented fashion and lifestyle themes emerged as the retail concept in the marketing and positioning of a number of stores. More international retailers from Europe, the US and Japan made their debut in Hong Kong, adding to the vibrancy of the retailing scene and Hong Kong’s role as a fashion centre. Hong Kong’s pro-business environment also attracted a number of international retailers not only to set up shops but also their regional headquarter in the city to showcase their products before deciding whether or not to launch them in China. The rapid expansion, however, led to keen competition for prime retail sites and pushed up rent substantially.
Non-grocery retailers dominant
Non-grocery retailers contributed the majority share of the retail trade in Hong Kong, accounting for three-quarters of the sales value, with grocery retailers making up the rest of the sales. Non-store retailing, including sales via the internet was insignificant. Designer clothing, cosmetics, jewellery and watches, as well as other international luxury goods enjoyed strong sales as these products were among the top purchases of the mainland tourists. The absence of import duties and VAT means that on average, prices in Hong Kong are 20-30% cheaper than in China. Within non-grocery, leisure and personal goods retailers generated the largest amount of sales. Clothing and footwear retailers have the highest number of outlets. Mixed retailers and those engaged in selling clothing and footwear achieved the highest growth in value sales by 10% in 2004.
Dairy Farm International Holdings the leading retailer
The Hong Kong retail market is marked by a high degree of fragmentation, indicative of the stiff competition. Multiples continue to be the leading retailers in the Hong Kong market. The top retailer in 2005, Dairy Farm International Holdings Ltd, had a value share of below 8%, while the second largest player, AS Watson Group, recorded a value share of slightly over 5%. Both operate supermarket chains as well as health and beauty stores. Dairy Farm also has furniture and furnishings stores while Watson owns electronics goods, or durable goods stores. Aeon Stores (Hong Kong) Ltd, the third ranked player, which operates department stores and mixed retailers, managed to secure less than 2% of the value share.
Market to remain vibrant but margins will be under pressure
The outlook for the retail market remains bright, as Hong Kong will continue to be an attractive shopping place for tourists from China because of the relatively cheaper prices of its products. Meanwhile, increased affluence among the local population will support sales of more high value items, including groceries. The retail market is expected to see a constant value CAGR of 3% over the forecast period. However, competition for prime location will be intense. The higher rent as a consequence of this will erode retailers’ margins. Retailers who are highly dependent on spending from Mainland tourists for their revenue will also be vulnerable to any slowdown in China’s economic growth.
Table of contents
1. EXECUTIVE SUMMARY
Individual travel scheme sparked off a rebound in retailing
A fashion centre and a launching pad into the Chinese market
Non-grocery retailers dominant
Dairy Farm International Holdings the leading retailer
Market to remain vibrant but margins will be under pressure
2. OPERATING ENVIRONMENT
2.1 GOVERNMENT POLICIES
Individual Visit Scheme triggered strong recovery in retail market
Advocating a pro-business environment
2.2 LEGISLATION
Laissez faire attitude guided by Statement on Competition Policy
Self-regulation and Code of Practice for retailers
Limited intervention in retailing of foodstuffss and household necessities
Consumer rights’ protected under Sales of Goods Ordinance
Electronic Transaction Ordinance to regulate electronic commerce
Labelling requirements
Punishment for infringements of copyrights and sale of counterfeit goods
2.3 OPENING HOURS
Long opening hours to attract shoppers
2.4 RETAILING LANDSCAPE
Main street versus out of town
Shopping centres
Summary 1 Major shopping centres/malls in Hong Kong
2.5 EMPLOYMENT IN RETAILING
Minimum wage
Table 1 Employment in Retailing: 2000-2005
2.6 CASH AND CARRY/WAREHOUSE CLUBS
3. RETAILING: RETAIL SALES
3.1 MARKET PERFORMANCE
Overview
Positive growth factors
Negative growth factors
Table 2 Sales in Retailing by Sector: Value 2000-2005
Table 3 Sales in Retailing by Sector: % Value Growth 2000-2005
Table 4 Sales of Grocery Vs Non-Grocery in Retailing 2000-2005
4. RETAILING: COMPETITIVE ENVIRONMENT
4.1 LEADING RETAILERS
Table 5 Retailing Company Shares: % Value 2004-2005
4.2 RECENT MERGERS AND ACQUISITIONS
Sun Hung Kai Properties acquired department store, Seiyu
Daily Stop sold to Dairy Farm
Dickson Concepts bought remaining stake in Seibu
Celestial became a major stakeholder of Pricerite
Private companies acquired Sogo Hong Kong
Summary 2 Major Mergers and Acquisitions 2001-2005
4.3 CONCESSIONS
5. PRIVATE LABEL
5.1 RETAILERS AND THEIR STRATEGIES
Strategies
Positioning
Penetration
Summary 3 Selected Retailers and their Private Label Brands 2005
6. RETAILING: FORECAST MARKET PERFORMANCE
Overview
Positive growth factors
Negative growth factors
Table 6 Forecast Sales in Retailing by Sector: Value 2000-2005
Table 7 Forecast Sales in Retailing by Sector: % Value Growth 2000-2005
7. MARKET PERFORMANCE: GROCERY RETAILERS
7.1 OVERVIEW
Key trends and developments
Competitive environment
Forecast
Table 8 Grocery Retailers by Sector: Value 2000-2005
Table 9 Grocery Retailers by Sector: Units 2000-2005
Table 10 Grocery Retailers by Sector: Selling Space 2000-2005
Table 11 Grocery Retailers by Sector: % Value Growth 2000-2005
Table 12 Grocery Retailers by Sector: % Unit Growth 2000-2005
Table 13 Grocery Retailers by Sector: % Selling space growth 2000-2005
Table 14 Grocery Retailers Company Shares: % Value 2004-2005
Table 15 Grocery Retailers Brand Shares: % Value 2004-2005
Table 16 Grocery Retailers Forecasts by Sector: Value 2005-2010
Table 17 Grocery Retailers Forecasts by Sector: Units 2005-2010
Table 18 Grocery Retailers Forecasts by Sector: Selling Space 2005-2010
Table 19 Grocery Retailers Forecasts by Sector: % Value Growth 2005-2010
Table 20 Grocery Retailers Forecasts by Sector: % Unit Growth 2005-2010
Table 21 Grocery Retailers Forecasts by Sector: % Selling space growth 2005-2010
7.2 FOCUS SECTOR: DISCOUNTERS
Key trends and developments
7.3 FOCUS SECTOR: CONVENIENCE STORES
Key trends and developments
Competitive environment
Forecast
Table 22 Convenience Stores: Value Sales, Outlets and Selling Space 2000-2005
Table 23 Convenience Stores: Value Sales, Outlets and Selling Space: % Growth 2000-2005
Table 24 Convenience Stores Company Shares by Value 2004-2005
Table 25 Convenience Stores Brand Shares by Value 2004-2005
Table 26 Convenience Stores Company Shares by Outlets 2004-2005
Table 27 Convenience Stores Brand Shares by Outlets 2004-2005
Table 28 Convenience Stores Company Shares by Sales Area 2004-2005
Table 29 Convenience Stores Brand Shares by Sales Area 2004-2005
Table 30 Convenience Stores Forecasts: Value Sales, Outlets and Selling Space 2005-2010
Table 31 Convenience Stores Forecasts: Value Sales, Outlets and Selling Space: % Growth 2005-2010
8. MARKET PERFORMANCE: NON-GROCERY RETAILERS
8.1 OVERVIEW
Key trends and developments
Competitive environment
Forecast
Table 32 Non-Grocery Retailers: Value Sales, Outlets and Selling Space 2000-2005
Table 33 Non-Grocery Retailers: Value Sales, Outlets and Selling Space: % Growth 2000-2005
Table 34 Non-Grocery Retailers Company Shares by Value 2004-2005
Table 35 Non-Grocery Retailers Brand Shares by Value 2004-2005
Table 36 Non-Grocery Retailers Company Shares by Outlets 2004-2005
Table 37 Non-Grocery Retailers Brand Shares by Outlets 2004-2005
Table 38 Non-Grocery Retailers Company Shares by Sales Area 2004-2005
Table 39 Non-Grocery Retailers Brand Shares by Sales Area 2004-2005
Table 40 Non-Grocery Retailers Forecasts: Value Sales, Outlets and Selling Space 2005-2010
Table 41 Non-Grocery Retailers Forecasts: Value Sales, Outlets and Selling Space: % Growth 2005-2010
8.2 FOCUS SECTOR: HEALTH AND BEAUTY RETAILERS
Legislation
Key trends and developments
Competitive environment
Forecast
Table 42 Health and Beauty Retailers: Value Sales, Outlets and Selling Space 2000-2005
Table 43 Health and Beauty Retailers: Value Sales, Outlets and Selling Space: % Growth 2000-2005
Table 44 Health and Beauty Retailers Company Shares by Value 2004-2005
Table 45 Health and Beauty Retailers Brand Shares by Value 2004-2005
Table 46 Health and Beauty Retailers Company Shares by Outlets 2004-2005
Table 47 Health and Beauty Retailers Brand Shares by Outlets 2004-2005
Table 48 Health and Beauty Retailers Company Shares by Sales Area 2004-2005
Table 49 Health and Beauty Retailers Brand Shares by Sales Area 2004-2005
Table 50 Health and Beauty Retailers Forecasts: Value Sales, Outlets and Selling Space 2005-2010
Table 51 Health and Beauty Retailers Forecasts: Value Sales, Outlets and Selling Space: % Growth 2005-2010
9. NON-STORE RETAILING: VENDING
Key trends and developments
Competitive environment
Forecast
Table 52 Vending: Value 2000-2005
Table 53 Vending: % Value Growth 2000-2005
Table 54 Vending Company Shares by Value 2004-2005
Table 55 Vending Brand Shares by Value 2004-2005
Table 56 Vending Forecasts: Value 2005-2010
Table 57 Vending Forecasts: % Value Growth 2005-2010
10. NON-STORE RETAILING: HOMESHOPPING
Key trends and developments
Competitive environment
Forecast
Table 58 Homeshopping: Value 2000-2005
Table 59 Homeshopping: % Value Growth 2000-2005
Table 60 Homeshopping Company Shares by Value 2004-2005
Table 61 Homeshopping Brand Shares by Value 2004-2005
Table 62 Homeshopping Forecasts: Value 2005-2010
Table 63 Homeshopping Forecasts: % Value Growth 2005-2010
11. NON-STORE RETAILING: INTERNET RETAILING
Key trends and developments
Competitive environment
Forecast
Table 64 Internet Retailing: Value 2000-2005
Table 65 Internet Retailing: % Value Growth 2000-2005
Table 66 Internet Retailing Company Shares by Value 2004-2005
Table 67 Internet Retailing Brand Shares by Value 2004-2005
Table 68 Internet Retailing Forecasts: Value 2005-2010
Table 69 Internet Retailing Forecasts: % Value Growth 2005-2010
12. NON-STORE RETAILING: DIRECT SELLING
Key trends and developments
Competitive environment
Forecast
Table 70 Direct Selling: Value 2000-2005
Table 71 Direct Selling: % Value Growth 2000-2005
Table 72 Direct Selling Company Shares by Value 2004-2005
Table 73 Direct Selling Brand Shares by Value 2004-2005
Table 74 Direct Selling Forecasts: Value 2005-2010
Table 75 Direct Selling Forecasts: % Value Growth 2005-2010