“Of the HK$60 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 earlier this year at a business luncheon co-hosted by the British Business Association of Macao (BBAM) and the American Chamber of Commerce in Macau (AmCham Macau). The answers came in from the audience: 80 percent? 70 percent? The correct answer – 40 percent.
As you might expect, the hundred or so association and chamber members and guests in attendance were genuinely surprised by such a low percentage, indicating that despite common assertions, the majority of retail spending is actually done by locals.
Tong went on to elaborate that the average shopping spend by visitors in 2013 peaked at HK$1,000, but that it dipped below even the 2011 levels to HK$760 in 2015. Compare this with HK$53,000 average spend by locals in 2013, and just under HK$51,000 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, giving 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 indicated that total retail sales in Macau dropped 10 percent in the first three quarters of 2015, compared with sales in the same period of 2014, and luxury goods 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 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 tourists 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.
So we shall now wait and see just how much local residents decide to shop in 2016.
