Retail In China Suffers From New Year’s Hangover

While sales surrounding China’s Lunar New Year gave some retailers reason to celebrate, that was not the case for all of them.

As a result, South China Morning Post reports, the stock value of a number of jewelry and cosmetics retailers in the country dropped yesterday (Feb. 18). Analysts told the outlet that lackluster New Year sales were felt particularly hard by those sellers with locations in smaller neighborhood malls, as opposed to ones housed in larger ones, which saw a greater influx of foot traffic during the holiday period.

Another factor that contributed to the stock slide for jewelry and cosmetics retailers in the region, shares SCMP, was a dropoff in shopping by mainland tourists during the Lunar New Year. Sa Sa International, for example, reported to the outlet that its sales to mainland tourists fell 26 percent from the same period last year, with the average number of transactions among that consumer group decreasing 18 percent and the average ticket cost falling 9 percent.

“This showed a further deterioration from the third quarter [for Sa Sa] as the Chinese tourist arrivals widened to a double-digit decline during the period,” Bocom International told SCMP.

Credit Suisse, meanwhile, told the outlet that it had visited nine shopping malls in China during the Lunar New Year and found that the majority of them were less busy within that period than they normally are on any given weekend.

“The era of easy money in the retail industry has come to end,” Maureen Fung Sau-yim, a director of Sun Hung Kai Properties subsidiary, Sun Hung Kai Development, told SCMP. “Looking ahead, we have to work harder to cope with the market change” (referring to, explains the outlet, a stronger Hong Kong dollar and fewer mainland tourists).