Hong Kong’s retail sales contracted for a fifth consecutive month in July by 11.8 per cent year on year, as changing consumer patterns continued to dampen domestic spending.
Provisional figures released by the Census and Statistics Department on Friday showed sales in July shrank to HK$29.1 billion (US$3.73 billion), declining further from the 9.7 per cent year-on-year dip recorded in June.
It marked the fifth consecutive contraction following 15 months of continuous growth after the coronavirus pandemic.
A government spokesman attributed the poor performance to the changes in consumption patterns, the strong Hong Kong dollar and outbound summer travel by residents.
Retail sales contracted by 7.3 per cent in the first seven months of 2024 compared with the same period last year.
The spokesman added that the retail sector would continue to face challenges in the near term.
“Nonetheless, the central government’s various measures benefiting Hong Kong, as well as the government’s strenuous efforts to promote a mega event economy, boost market sentiment and support the development of the sector, should help stimulate retail businesses,” the spokesman said.
“Continued growth of the economy and rising employment earnings should also provide support to the retail sector.”
The spokesman said authorities would continue to support small and medium enterprises in adopting ready-to-use digital technology solutions under the digital transformation support pilot programme.
He also highlighted the launch of an initiative under the Dedicated Fund on Branding, Upgrading & Domestic Sales (BUD Fund) last month, which is aimed at helping enterprises tap more easily into the mainland Chinese market through e-commerce.
“The government will continue to assist the local retail sector in upgrading and transformation,” the spokesman said.
By category, the value of sales of motor vehicles and parts logged the largest contraction, declining by 27.9 per cent year on year.
Bigger ticket items such as jewellery, watches and clocks, and valuable gifts were down 25 per cent, Chinese medicinal drugs and herbs by 24.9 per cent, and department stores by 24.3 per cent.
The Hong Kong Retail Management Association called on landlords to provide “immediate and effective” rent reductions to retailers so they could survive what it described as a “crisis”.
“Even though the business of retailers has dropped sharply, they still have to bear disproportionately high rents,” the association said.
It said that according to its latest members’ survey, 90 per cent of polled retailers also experienced sluggish sales in August, with most of them seeing single-digit and low-double-digit declines.
Only 10 per cent of respondents reported an increase in business, owing to “vigorous promotions and discounts”, the association said.
Around 60 per cent of surveyed members expected sales to continue to fall in September and October.
“Only a small number of companies have recorded an increase in business, and generally they have implemented vigorous promotions and discounts, which have narrowed the decline in business or caused a slight increase.” the association said.
“However, the operating costs of retail stores are high, and the sustainability and space for price reductions are limited.”
