“Of the HKD60 billion dollars spent in Macau on retail last year, and with 30 million visitors and 640,000 local population, what percentage of the spend came from visitors?”
This was a question posed by Oliver Tong, Associate Director of Retail Properties for Jones Lang LaSalle (JLL) when he spoke at a business luncheon co-hosted by the British Business Association of Macao (BBAM) and the American Chamber of Commerce in Macau (AmCham Macau). Answers came in: 80%, 70% …. The correct answer – 40%. The hundred or so association and chamber members and guests in attendance were genuinely surprised by such a low percentage.
Tong went on to elaborate that the average shopping spend by visitors in 2013 peaked at HKD1,000, but that it has dipped below even the 2011 levels to HKD760 in 2015. Compare this with HKD53,000 average spend by locals in 2013, and just under HKD51,000 in 2015.
All this points to ‘next generation’ retail in Macau needing to target the local market over the tourist sector.
Another question Tong posed to his audience was around “Bricks versus Clicks”. How can stores differentiate from their online competitors in enhancing the shopping experience; “What can the retail sector do offline that they cannot do online?” He highlighted how Hong Kong shopping malls have found success through focusing on value added services. Examples such as free locker service for visitors, especially day trippers, to store their heavy bags while shopping, free WIFI, excellent bathroom facilities and baby changing nursery rooms. Umbrella stands offering umbrellas on payment of a deposit that is refundable on return is an ingenious way of encouraging shoppers to return. “The research shows that these [services] make people come back more, spend more time in the shop, and spend more money,” added Tong.
Tong contends that total retail sales in Macau have dropped 10 percent in the first three quarters of 2015, compared with sales in the same period of 2014, and luxury goods have fared the worst, plunging 25 percent, as the drop in consumer traffic, instigated by President Xi’s anti-corruption drive on the mainland, continues to slash demand.
However, its not all a story of doom and gloom, says Tong. Sportswear, cosmetics and fast fashion had continued to perform strongly in 2015.
In summarizing the health of the Macau retail sector, Tong advises mall operators and retailers to shift their focus from tourism to that of the untapped local opportunity which is set to continue to grow, with per capita income in Macau having risen consistently over the past 10 years.
