Hong Kong Luxury Sales Decline as Consumer Spending Shifts

Hong Kong’s retail sales dropped in July as consumers traveled abroad for their summer vacations.

Revenue from jewelry, watches, clocks and valuable gifts slid 25% year on year to HKD 3.75 billion ($480.7 million) for the month, the municipality’s Census and Statistics Department said Friday. Sales in all retail categories dropped 12% to HKD 29.13 billion ($3.74 billion). In comparison, June saw year-on-year decreases of 23% for hard luxury and 10% overall.

“The value of total retail sales declined further in July from a year earlier amid the continued impact of the change in consumption patterns and the strong Hong Kong dollar. More outbound travels by residents during the summer holidays was also one of the factors,” a government spokesperson commented.

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 six months of the year, hard-luxury sales slipped 15%, HKD 30.25 billion ($3.88 billion). Sales in all retail categories fell 7% to HKD 220.59 billion ($28.29 billion).

“The retail sector will still face challenges in the near term,” the spokesperson added. “Nonetheless, the…governments’ various measures benefiting Hong Kong…should help stimulate retail businesses. Continued growth of the economy and rising employment earnings should also provide support to the retail sector.”

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