- Retail sales forecast to fall for 18th-straight month in May
- Chow Tai Fook building art-focused malls in mainland China
The family behind Chow Tai Fook Jewellery Group Ltd. wants to look beyond mainland visitors with retail sales in Hong Kong poised to fall an 18th-straight month in May.
“The city is over-reliant on mainland tourists,” said Adrian Cheng, whose family’s Chow Tai Fook Holding controls the world’s largest listed jewelry chain as well as mall-builder New World Development Co Ltd. “What we need is to change our strategy to adjust to changes.”
With Chinese travelers expected to favor the U.K. as the pound weakens after the Brexit vote, the group has set its sights on new strategies such as operating a mall filled with shops targeted at children, and shopping centers merged with art galleries in mainland China, Cheng said in an interview.
Visits by mainland tourists, who account for more than two-thirds of arrivals in Hong Kong, fell 16 percent in 2015 and slumped a further 13 percent in January to April this year. That’s hurting profits at retailers from Chow Tai Fook Jewellery to cosmetics chain Sa Sa International Holdings Ltd. and restaurants operator Tsui Wah Holdings Ltd.
Hong Kong retail sales data for May, due out Thursday, is forecast to show a fall of 8.8 percent as the slump worsens from the 7.5 percent decline in April.
Chow Tai Fook Jewellery shares are up 12 percent so far this year through Wednesday, while New World is flat, compared with the 6.8 percent drop in the benchmark Hang Seng Index. The jeweler’s stock has fallen 63 percent since its debut in December 2011.
New World in April revamped an existing mall in Hong Kong for HK$700 million ($90 million) to incorporate amusement-park rides and shops targeted at children. Chow Tai Fook is also expanding its art-focused K11 mall concept in mainland China, with two properties due to open in the cities of Guangzhou and Wuhan next year, and a further 12 more by 2021, said Cheng, who’s vice chairman at New World.
The group’s K11 mall in Shanghai, which was completed in 2013, has been able to boost visitor traffic about 30 percent whenever it conducts art shows including at its lobby, and that helped the mall to post double-digit growth in sales last year, Cheng said.
Chinese customers “like to visit malls during their leisure time, so we opened a public museum space to exhibit masterpieces by great artists such as Monet in the retail mall, something which we call ‘museum-retail’,” said Cheng. “We hope that mass audiences can appreciate the arts after visiting our mall.”