Hong Kong Luxury Sales Hit by Shift in Spending Patterns

Hong Kong retail sales dropped in September as consumers spent less on luxury items and outbound tourism increased. 

Revenue from jewelry, watches, clocks and valuable gifts slid 18% year on year to HKD 3.55 billion ($456.4 million) for the month, according to data the government’s Census and Statistics Department released last week. However, the decrease slowed from the previous month, when hard-luxury revenue fell 24%. Retail sales across all product categories slipped 7% to HKD 29.57 billion ($3.8 billion). 

The decline also reflected an unfavorable comparison with the same period a year ago, when spending bounced back after the border reopened and tourists were allowed to return to Hong Kong from the mainland to purchase luxury goods. The municipality derives a large portion of its luxury revenue from tourists — primarily from China — who come there to purchase goods. 

“The value of total retail sales continued to decline in September from a year earlier, but the rate of decline narrowed,” a government spokesperson said. “The near-term performance of the retail sector [will] continue to be affected by the change in consumption patterns of residents and visitors.” 

For the first nine months, proceeds from jewelry, watches, clocks and valuable gifts fell 16% to HKD 37.71 billion ($4.85 billion). Total retail sales for the period were down 8% to HKD 279.41 billion ($35.93 billion). 

“An improved outlook for the mainland economy following the recent introduction of a wide range of stimulus measures, and a possible easing of the Hong Kong dollar alongside the US dollar…would be conducive to boosting sentiment and supporting spending,” the spokesperson added.” In addition, the [government’s] various measures benefiting Hong Kong and initiatives to boost market sentiment and increasing employment earnings would also benefit the sector.”

Image: Mong Kok shopping district in Hong Kong. (Shutterstock)