Hong Kong’s retail sales slid in May amid a change in consumer spending patterns and the strength of local currency.
Revenue from jewelry, watches, clocks and valuable gifts declined 21% year on year to HKD 4 billion ($511.5 million) for the month, the municipality’s Census and Statistics Department reported Tuesday. Sales in all retail categories dropped 12% to HKD 30.51 billion ($3.91 billion). In comparison, April saw year-on-year decreases of 29% for hard luxury and 15% overall.
The downturn is partly the result of a weak comparison with the same period last year, 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 addition, the strength of the Hong Kong dollar in relation to other currencies used by tourists also hurt sales.
“The value of total retail sales continued to decline notably in May from a year earlier, mainly affected by changes in the consumption patterns of visitors and residents, as well as the strength of the Hong Kong dollar,” a government spokesperson said. “A relatively high base for comparison in the same period a year ago was also relevant.”
In the first five months of the year, hard-luxury sales slipped 11% to HKD 22.23 billion ($2.85 billion). Sales in all retail categories fell 6% for that period to HKD 161.52 billion ($20.68 billion).
The government believes some of the challenges will persist in the short term, but other factors could help improve retail sales.
“Looking ahead, the retail sector may still face some challenges in the near term,” the spokesperson added. “However, the government’s recently announced measures benefiting Hong Kong, including the further enhanced Individual Visit Scheme [allowing residents of the mainland to visit on an individual basis] and the increase of duty-free allowance for luggage articles for mainland resident visitors, should help stimulate retail businesses…. Rising employment earnings and the recent stabilization of the asset markets also bode well for the sector.”
Image: The Mong Kok shopping district in Hong Kong. (Shutterstock)
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