With the economy showing signs of sustained strength and the unemployment rate falling to 5.3 per cent in December, the retail sector has every reason to forecast continuous improvement in the year ahead. Although Bankee Kwan, chairman of the Hong Kong Retail Management Association (HKRMA), notes that factors like the threat of an outbreak of bird flu and higher interest rates create uncertainty, he admits to being cautiously optimistic about the overall outlook.
According to the monthly survey by the Census and Statistics Department, the value of total retail sales in October was estimated at HK$16.6 billion, representing an increase of 4.8 per cent over the corresponding period in 2004. The month-by-month comparison showed the total volume of sales increased by 3.7 per cent. Taking the first ten months of 2005, total retail value increased by 7 per cent and volume was up 6.1 per cent compared to the equivalent period the previous year.
Mr Kwan says that retail growth in the second half of 2005 was driven mainly by higher sales in supermarkets and department stores, reflecting a rise in domestic consumption. During the first half of the year , high single-digit or even double-digit growth was seen for cosmetics, digital equipment and luxury goods, areas which largely benefited from the strength of the tourist dollar.
Looking ahead, Mr Kwan believes that Hong Kong's export performance and China's economy will influence how things develop in the local retail sector in the coming months. He also mentions that higher rental costs and tightening interest rates may lead to considerable increases in retail operating costs and could be a major obstacle to growth. He notes, too, that a secondary effect of interest rate hikes will be to reduce the disposable income of mortgage holders and will discourage additional spending.
Demand for staff
Having said that, the opening of Hong Kong Disneyland and the general economic revival have significantly boosted retailers and created new demand for frontline sales staff. Experienced professionals are needed almost everywhere, and research conducted by the HKRMA shows staff turnover in the retail sector stood at over 30 per cent in 2005, while among frontline employees, it was above 60 per cent.
The shortage of trained staff is the result of local expansion and simultaneous demand from Macau and China for qualified personnel. "As more facilities and shopping centres open in Macau, they have to hire frontline salespeople. Like mainland China, they also need middle and senior managers with retail experience from Hong Kong, especially those who know about luxury goods and services."
Mr Kwan stresses that good service is an essential element for success in the retail industry. "Consumers nowadays have become more demanding than ever in terms of service quality," he says. As a result, salespeople must have high levels of product knowledge, as well as an exemplary attitude towards service.
"Even selling clothes involves a lot of detailed knowledge," he explains. "You need to know the functions and features of whatever you are selling and give professional advice to customers, for example, on how to mix and match."
Because of this, numerous retailers have been making concerted efforts to upgrade their service standards and have invested substantial resources to provide retail sales teams with comprehensive and structured training programmes. Also, they have made renewed efforts to create better long-term career prospects within the industry. The entry requirements to get into the sector may not be as high as for some other areas, but employers realise that staff who are outgoing, ambitious, hard-working and like dealing with people form the backbone of the business.
The HKRMA represents over 500 major retail chains, which have more than 5,000 outlets and employ close to two-thirds of the total retail workforce in Hong Kong. It has organised a special service and courtesy award since 1986 to promote awareness of standards within the industry and invites companies to nominate members of staff for the award.
In parallel, the association has a "mystery shopper" programme, which serves as a way of benchmarking general standards of customer service among local companies. In 2005, a total of 157 retailers representing 4,344 outlets participated in the programme, while 4,941 mystery shopper assessment visits were made. The results showed that all 11 of the retail business categories taking part recorded an average performance above 80 per cent, and the retail sector overall has maintained a performance rating in the range of 80 per cent for the past four years.
Mr Kwan says that keen competition has fostered recognition of the importance of good service. Therefore, in addition to organising the programmes outlined above, the HKRMA has arranged training courses and workshops to upgrade customer service standards and heighten the profile of Hong Kong's retail sector.
- Tourist spending and the economic pick-up boosted the
retail sector in 2005
- Higher rental costs and interest rates will affect retailers
in the months ahead
- Strong demand remains for experienced sales professionals
and new recruits
- Competition within the industry has led to higher standards
of customer service