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2006 Christmas Sales in Major Overseas Markets and Retail Outlook for 2007

2006 Christmas Sales in Major Overseas Markets and Retail Outlook for 2007. Research Department 28 December 2006. 2006 Christmas Sales in Major Overseas Markets. 1. US – Retailers to Post 4-5% Growth. Basic Positive Factors. Fairly solid expansion helped by last-minute flurry.

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2006 Christmas Sales in Major Overseas Markets and Retail Outlook for 2007

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  1. 2006 Christmas Sales in Major Overseas Markets and Retail Outlook for 2007 Research Department 28 December 2006

  2. 2006 Christmas Sales in Major Overseas Markets 1

  3. US – Retailers to Post4-5% Growth Basic Positive Factors Fairly solid expansion helped by last-minute flurry • Low joblessness • Steady income growth • Respite of oil prices • Windfalls from stock market Other Positive Factors • Longer Thanksgiving-to-Christmas • A full weekend of last-minute purchases • An influx of tourists 2

  4. US – Battlefield between Shoppers and Retailers • Prevailing economic slowdown • Slackening housing market • Still-high fuel costs • Selected and procrastinated purchases Negative Factors Even more aggressive discounts and promotions Retailer Strategies • Early implementation of promotions • Deeper discounts • Issuance of gift certificates 3

  5. US – Polarisation of Market Discounters and mass merchandisers • Caution remained the buzzword • Sustained popularity of mass merchandisers and discounters Better performance of value-for-money merchandise • Low prices • Free delivery E-tailers High-end stores • Still-strong showing due to continued spending spree of high-income consumers 4

  6. US – Demand Pattern Similar to Last Year’s Consumer electronics • Flat-panel TVs • Handheld digital audio players • DVD players, digital cameras, mobile phones, notebooks Consumer electronics remained hot sellers • Video game consoles – Wii & PS3 • TMX Elmo • Certain dolls and licensed toys – Barbie, Bratz & Dora the Explorer • Educational toys, robots, trucks & cars, children’s MP3 players Toys Clothing • Sales affected by warm winter • High-end apparel • Fine jewellery • Higher-priced watches Luxuries 5

  7. Europe – Generally Firmer Festive Spending Better sales recorded for the major markets amid moderate economic expansion • Still-high unemployment • Still-high oil prices • Higher interest rates • Shoppers to buy abroad Major Concerns • Heavy emphasis on low prices and store promotions • Surge in online sales • Growing popularity of gift certificates • Better sales for luxuries in some markets Major Developments 6

  8. Germany – Sales to Increase by 2% Consumer electronics • Flat-screen TVs, DVD players, digital music players, digital cameras, GPS navigation systems Spending in advance of a 3-point VAT hike • Video games, educational toys, board games, model trains, plush toys, doll sets Toys Other gifts • Jewellery and watches Clothing • Sales dragged down by mild temperatures 7

  9. France and Italy – Higher Sales Than Last Year Especially in France Better mood to spend during this holiday season France Italy • Consumer electronics • Video games • Jewellery and timepieces • Consumer electronics • Video games • Clothing 8

  10. UK – Sales to Increase 3-4% Electronic gadgets • Flat-panel TVs • Digital music players • Mobile phones • Home cinema products • Lap top computers Low unemployment and firming house prices to support spending Toys • Video games, educational toys, classic toys Clothing • Sales boosted by deep discounts Other favoured gifts • Jewellery and watches 9

  11. Japan – Consumers More Willing to Spend Confidence spurred by rising winter bonuses and better job prospects Consumer electronics • Flat-screen TVs and digital music players much sought after Toys • Video games a popular buy Clothing • Demand hampered by warm weather Jewellery and watches • Sales facilitated by appetite for luxuries 10

  12. Chinese Mainland – Encouraging Year-end Sales Retail sales remained strong despite tightening measures Contributing factors Favoured gift items • Economic fundamentals remained sound • Appreciation of RMB • Growing popularity of Christmas • Increasing Christmas sales promotions • Most consumer products including consumer electronics, toys, garments, timepieces and jewellery 11

  13. utlook for 2007 12

  14. US – Consumer Spending to Cool Slightly • Sustained consolidation of housing market Economy to ease back into a lower gear • Consumers to remain prudent • Sustained popularity of mass merchandisers and discounters • But higher-income consumers to continue spending spree • Hong Kong exporters to adjust their product strategies 13

  15. EU – Consumption to Remain Stable • Rising interest rates More moderate pace of economic expansion • Fiscal deficit reduction • Consumers to remain conservative • Value-for-money preferred but quality still sought after • Strong euro facilitating imports 14

  16. EU – Varied Performances • Relatively low joblessness • Favourable housing market UK Varied prospects for different markets • Slowing exports • VAT rise for 2007 Germany • Slowing exports • Deficit reduction measures Italy • Sustained job creation and income growth France 15

  17. Japan – Consumer Spending to Expand Steadily • Moderating exports Continued but tepid economic revival • An end to zero-interest-rate policy and expected tightening of fiscal policy • Sustained improvement in labour market and wages • Adherence to value-for-money but growing demand for higher-end products • Stable yen facilitating imports 16

  18. Chinese Mainland – Healthy Spending to Take Hold • Government policies such as introduction of minimum wages, salary reform for civil servants, expansion of rural consumption and increases in welfare expenditure Increased consumer spending a priority for 2007 • Rapid urbanisation and growth of middle class • CEPA III to provide sales opportunities • Shift in consumption on sophisticated consumer goods • Increasing mainland customers to shop in Hong Kong 17

  19. Hong Kong’s Exports Expected to Grow 6%in 2007 18

  20. Have a Prosperous 2007! 19

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