Slow sales for holiday season.

Asian countries' retailers face lower consumer confidence and economies that are starting to feel the global downturn Shopping is a national obsession in Singapore, yet this Lunar New Year retailers are struggling to get the city's usually insatiable shoppers to part with their cash as a cloud of economic gloom hangs over Asia. "Even though there's a 50 per cent sale on here, look at the sales counter, there's no one queuing. That's not normal," said Mrs Them, a house wife, browsing through a department store at the city's renowned Orchard Road shopping district. The Lunar New Year, which starts on January 26, comes hard on the heels of Christmas, signalling a traditional two-month shopping frenzy in most of East Asia as consumers splash out on seasonal foods as well as gifts and new clothes for the holidays. This year, though, shoppers are showing signs of restraint as a global economic crisis knocks consumer confidence across Asia and prompts governments and retailers to conjure up new ways to bolster spending. "It's going to be tough for Asian retailers, perhaps not quite as tough as in Europe and the US but we will see slower growth," said Paul McKenzie, head of consumer research at CLSA Hong Kong. He expects retail sales growth in Hong Kong and Singapore to be negative this year, or flat at best, compared with a rise of about 11.5 per cent and five per cent respectively last year. Slower growth in tourism, which accounts for 20 to 30 per cent of retail sales in Hong Kong, is expected to hurt retailers there. In China, HSBC forecasts annual retail sales growth to slow to a nominal rate of 15 per cent this year from about 18 per cent in 2008 as consumers tighten their belts amid a slowdown. To stimulate its economy, China will give its neediest citizens hand-outs of up to $26, while Taiwan will dole out the equivalent of $109 in shopping vouchers to brighten the mood before the Chinese new year holiday. Retailers globally have been hurt by a deteriorating economic outlook. In the US, stores experienced their most dismal Christmas holiday sales in 40 years, while a growing list of household names have disappeared off Britain's high street. But analysts say Asian retailers have an advantage as the impact of the economic crisis is far less than in the US and Europe. Also, consumer spending will likely benefit from sizeable government fiscal packages of about $640 billion in Asia, excluding Japan, hefty interest rate cuts and lower fuel prices. Still, with Hong Kong, Japan and Singapore all in recession, and Korea's economy tipped to contract in 2009 for the first time in 11 years, this year's shopping season could prove critical. "Everyone is worried about what will happen after Chinese New Year, when the impetus of the Christmas and new year shopping period is over," said Terry O'Connor, regional CEO for Courts, an electronic and furniture retailer that has 80 stores in Southeast Asia. "Consumers are cautious but it's not a disaster in Asia." Asia has enjoyed surging growth in recent years which has expanded the ranks of a middle-class keen to acquire the trappings of their newfound affluence. But in a region heavily dependent on exports, which fell sharply in December, cuts in work orders are leading to lay-offs in factories across the region. The International Monetary Fund predicts that Asia's economy will grow 4.9 per cent this year compared to a forecast of six per cent in 2008. The mood in Japan is particularly glum as it enters what some economists say might be its longest recession on record. Japan's no. 3 department store chain Takashimaya Company said sales at its flagship store in Tokyo fell five per cent year-on-year in the first two trading days of this year, a period that traditionally marks an annual ritual of bargain hunting. Discretionary items such as designer clothes and electronics are being hit hard, while stores report relatively solid sales of food items as people choose to spend more time at home. "Our immediate goal is just to survive," said Ichiro Fukuyama, associate director at J Front Retailing, the country's second largest department store chain. Consumer expenditure across Asia is expected to slow in 2009 and consumer confidence has been hurt. In China, 46 per cent of consumers thought the country's economic situation was good in November compared to 90 per cent in April 2007. Meanwhile, service sector sentiment in Japan, watched closely for consumer and retail trends, hit a record low in December.

2009 Al Sidra Media LLC

Provided by Syndigate.info an Albawaba.com company