No roar from Asian retailers as year of Tiger nears
No roar from Asian retailers as year of Tiger nears
By Angela Tan
SINGAPORE (Reuters): The Year of the Tiger will prove vicious for Asia's retailers, with potential to leave a bloodbath among the less savvy, analysts and shopowners say.
In Singapore, retailers lament that even sales of small items like pineapple tarts and other lunar new year goodies have been hit by Asia's financial malady.
The regional crisis has seen stock markets plunge and many regional currencies lose 20 to 80 percent of their value against the U.S. dollar since mid-1997. As a result, many of the area's economies are a strict, if not starvation, fiscal diet.
Along Singapore's famed Orchard Road shopping belt, there has been a relative dearth of the decorations that typically adorn facades of major malls just ahead of the lunar new year, celebrated by ethnic Chinese throughout Asia.
Together with Christmas, the Lunar New Year and the Islamic Eid al-Fitr celebrations account for almost 60 percent of retailers' annual turnover.
This year the latter holidays fall together at the end of January. January 28 is the first day of the Year of the Tiger in the 12-year Chinese zodiac cycle.
"We expect 1998 to be more difficult for the retail trade as the full impact of the recent currency turmoil works its way into the economies of the countries in the region," Jannie Tay, managing director of Singapore's luxury watch retailer Hour Glass, told Reuters.
Other Asian countries are unlikely to be spared the tiger's wrath.
In Malaysia, retailers are reeling from sluggish sales.
"Our members have reported an average drop of 20 to 40 percent in business," said Susan Chong, general manager of the Malaysian Retailers Association.
The association's 110 members, who run 2,500 outlets in Malaysia retailing goods from groceries to clothing, are prepared for a 50 percent sales drop after the festivities.
"Some are already preparing for very stringent measures, including laying off non-productive staff," she said.
Malaysia has launched an austerity campaign to weather its economic crisis. Among measures recommended by the government is a cutback on wasteful and luxury consumer goods.
In Hong Kong, some retailers are demanding landlords slash rents by 40 percent, saying otherwise they would have to shut their shops because business had been halved in recent weeks.
"People just do not come to buy things," said Philip Ma, chairman of Hong Kong's Retail Management Association and group managing director of The Sincere Company Ltd.
"People may see a 30-50 percent drop in business... The Asian financial crisis is a factor, tourists are almost non-existent. Locals are not in a spending mood when the stock market is so low," Ma said.
"For 1998 we have a very pessimistic forecast. The retail trade will be lucky to achieve the levels of 1997," Ma said.
"After Chinese New Year, we will see more shutdowns. It's still the peak season, and people are making a last ditch effort to convert stock to cash," he said.
Chinese New Year in Thailand will likely be more blue than red, the traditional celebratory colour for the season, as the country's wealthy Chinese suffer from the worst economic slump in decades.
Sales of gold, once the most popular shopping items during this time, have dropped substantially.
"When people walk into my shop these days, I would assume that they are in to sell back the gold rather than buying," said Samsak Cheung, owner of a retail gold shop in Bangrak, one of Bangkok's major Chinese communities.
Fruit importers said they expected a big drop in sales this holiday and would import fewer big apples, pears and Chinese mandarin oranges, popular for the festivals.
In Indonesia, where the rupiah has lost over 80 percent of its value to the U.S. dollar, retailers note a shift in demand away from luxury goods to non-branded items.
The U.S.-based JC Penney's chain in Indonesia, considered a luxury goods retailer, decided to close its last Indonesian operation by end of 1997 due to the economic crisis.
Analysts said the closing down of the Penney stores signaled more luxury goods stores would find it hard to survive in 1998 due to the ongoing crisis.
"Every Asian country has a soft market. Some worse than others. All the markets have to rationalize," said Frank Benjamin, president and chief executive officer of Singapore's upmarket fashion retailer, FJ Benjamin.