Hong Kong’s retail sector continues to face significant challenges, with July retail sales falling 11.8% compared to the same period last year, marking the fifth consecutive month of decline. The total value of sales decreased to 29.1 billion Hong Kong dollars ($3.73 billion), highlighting ongoing issues such as changing consumption patterns, a strong local currency, and increased outbound travel by residents.
Market Highlights:
- Consistent Decline: The July sales drop follows a series of monthly declines: 9.7% in June, 11.5% in May, 14.7% in April, and 7% in March. In volume terms, retail sales decreased by 13.3% year-on-year in July, showing a worsening trend compared to an 11.2% decline in June and a 12.9% drop in May.
- Factors Affecting Sales: A government spokesman attributed the decline to several factors, including shifts in consumer behavior, a strong Hong Kong dollar, and more residents traveling abroad during holidays. These factors have compounded the challenges faced by the retail sector, particularly as local spending remains subdued.
- Visitor Arrivals Increase: Despite the downturn in retail sales, July saw a 9.3% increase in visitor arrivals, reaching 3.921 million. Mainland Chinese visitors, who constitute a significant portion of Hong Kong’s tourism, increased by 5.5% year-on-year to 3.140 million.
- Sector-Specific Declines: Sales in specific retail sectors experienced sharp declines, with jewelry, watches, clocks, and valuable gifts sales plunging 25% in July after a 23.1% drop in June. Clothing, footwear, and accessories sales also fell significantly by 17.9% in July, following a 9.1% decrease in June.
- Outlook and Challenges Ahead: The government has indicated that the retail sector will continue to face near-term challenges. The prolonged decline in retail sales and volume, alongside external factors such as a strong currency and increased outbound travel, suggests that recovery may be slow and uncertain.
Overall, while there has been an uptick in tourism, the persistent decline in retail sales reflects broader economic challenges and shifting consumer behaviors in Hong Kong, with the sector needing to adapt to these changes to stabilize and eventually recover.
