Retailers need to revise strategies to remain in the race

The 51st Hong Kong Brands and Products Expo, which closed on Monday, has more than reminded its visitors what "Made in Hong Kong" stands for. Held in the midst of an economic downturn, the event has also set an example of how the troubled retail sector can beat the sales slump.

It's widely recognized that the major problem facing Hong Kong's retail industry - one of the city's biggest employers - stems mainly from the fall in tourism spending, resulting from a combination of factors that have mostly been well documented. Suffice to say that the big spending visitors from the Chinese mainland aren't spending as much as before.

The thousands of retailers in the SAR's major commercial districts and their suppliers that cater mainly to mainland shoppers, understandably, have taken a big hit. Besides downsizing or closing down, some retailers are trying to refocus on the local consumer market. If they need some advice, they should listen to what a number of the storekeepers at the expo had to say.

A cheerful storekeeper said in a television interview that business was much better than she had expected. "I thought business would be so bad because of the lousy economy," she said, adding that her strategy was to boost sales by trimming her profit margin.

It worked. Sales at her store were up 20 percent on the previous expo. "I ended up earning more money than last year," she said.

A visitor to the expo said he had planned to spend no more than HK$1,000 on food and other items. "But, the prices were so attractive that I doubled my original budget," he said.

Those retailers who have become addicted to high profit margins in selling luxury goods to gullible tourists should realize that the tourism boom in the past decade or so was an abnormal phenomenon that is now gone forever. To survive, they'll have to figure out a way to restructure their pricing and costs to cater to local consumers.

(HK Edition 01/04/2017 page9)