While a handful of countries have started recovering from the COVID-19 pandemic, the global economy is still being heavily impacted by a near worldwide lockdown. In the local region, China, Hong Kong, and Macau have officially recorded little to no new cases in recent days, but offline retail in these three territories are demonstrating differences in their roads to full recovery.
Cosmose has completed a report on retail footfall, analysing offline retail traffic based on its proprietary location data from over 360,000 stores, including over 600 luxury and beauty brands, and major shopping malls in China, Hong Kong, and Macau between January to March 2020.
In Hong Kong, footfall in luxury brand stores in selected districts - including Kowloon, Shatin, Tuen Mun, Hong Kong Island, Yau Tsim Mong, and Yuen Long - dropped by about 50% in late March compared to 6 January, a benchmark for the study represented by a score of 100 for all cities.
As for beauty brands, traffic in cosmetics and beauty stores has been recovering slower than in luxury stores. Footfall remained almost stagnant from the beginning of February and had declined by 5% at the end of March.
The report has also studied footfall in Hong Kong's shopping malls Since the Hong Kong government launched several measures to lower the number of visitors, footfall in selected premium shopping malls in Hong Kong was halved in late March when compared to the pre-pandemic level in early January. Traffic in IFC and Pacific Place was more resilient than in other shopping malls, including Elements, K11 Musea, and Harbour City.
The report suggests that the current pandemic has brought an end to protests in Hong Kong, which could be an opportunity for retailers to attract local consumers. However, Hong Kong may face competition from Macau as Chinese tourists choose to lean on the side of caution and go there instead.
Turning to Macau, in early February all casinos were ordered to shut down and unsurprisingly footfall in brand stores at hotels and shopping malls was likely to see a dropoff. But the decline of 95% by mid-February was still an extremely harsh hit to see.
China's luxury and retail traffic declined significantly as well. Luxury traffic in selected Chinese cities - including Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Chongqing, and Hangzhou - all decreased significantly over 75% from mid-January to mid-February. New first-tier cities such as Chengdu, Chongqing, and Hangzhou experienced harsher hits than the others, with on average 90% decrease from the normal traffic level.
However, Chengdu, Chongqing, and Hangzhou have all seen a faster recovery rate than the others and the report suggests that brands should pay attention to the growing appetite from Hangzhou, Chengdu, and Chongqing.
China's beauty sector traffic dropped sharply with all surveyed cities seeing a more than 75% drop from mid-January to mid-February. Interestingly, it's been the regular beauty stores in Beijing, Shanghai, Guangzhou, and Shenzhen that have been recovering faster than the luxury boutiques.
It has been suggested that if recovery trends continue at the current pace, offline retail in China will bounce back to their pre-pandemic levels by June.