Change in Spending Patterns Hampers Hong Kong Luxury Sales

Hong Kong’s retail sales dropped in August as consumers moved away from purchasing luxury goods and traveled abroad for their summer vacations. 

Revenue from jewelry, watches, clocks and valuable gifts slid 24% year on year to HKD 3.93 billion ($505.8 million) for the month, the municipality’s Census and Statistics Department said last week. Sales in all retail categories dropped 10% to HKD 29.18 billion ($3.75 billion). That result is on par with July’s year-on-year decreases of 25% for hard luxury and 12% overall. 

“The value of total retail sales recorded a year-on-year decline amid the continued impact of the change in consumptions patterns, the relatively strong Hong Kong dollar, and increased outbound travels by residents during the summer holidays, among other factors,” a government spokesperson explained. 

The downturn is also partly the result of a weak comparison with the same period a year earlier, when the recently reopened border between China and Hong Kong buoyed tourism. The municipality derives a large portion of its luxury revenue from visitors, primarily from the mainland. 

In the first eight months of the year, hard-luxury sales slipped 16% to HKD 34.18 billion ($4.4 billion). Sales in all retail categories fell 8% to HKD 249.81 billion ($32.13 billion). 

“Looking ahead, the retail sector will still face challenges in the near term,” the spokesperson added. “Nonetheless, the government’s various measures benefiting Hong Kong, as well as the…various initiatives to boost market sentiment and support the development of the sector, would benefit retail business. Continued economic growth, rising employment earnings, and an easing Hong Kong dollar exchange rate alongside the US interest rate cut, would also provide support to the retail sector.”

Image: The Tsim Sha Tsui shopping district in Hong Kong. (Shutterstock)