Food
After steady recovery last year, Hong Kong’s retail sector is expected to improve further this year on the back of a bullish economic outlook, both globally and in China, says PWC Hong Kong.
Retail sales in Hong Kong for the first 11 months of last year eased up 1.8 per cent over the same period in 2016, and with the traditional shopping spree toward year-end, the full-year increase could reach 3 per cent (government retail sales figures will be released on Thursday).
Despite store consolidation and a retreat from main-street locations, luxury goods, especially jewellery and watches, was one of the best-performing sectors last year and is expected to further recover,
Hong Kong’s retail sector could have growth between 4 to 6 per cent this year, which is equivalent to about HK$465 to 480 billion, with a positive outlook for the next five years.
“All-time-high stock and real-estate markets, both local and global, have created a significant wealth effect, and much improved sentiment in consumption,” says PWC’s Michael Cheng.
“In addition, tourist arrival numbers in Hong Kong, particularly from China, have been encouraging and recovering steadily under the much better and more stable political and social environment.
Combined with a low jobless rate and a weakening US dollar against major currencies, Hong Kong’s retail sector should be recovering well in the medium term and exceed the all-time high of 2013 within the next five years.”
Tourism key
However, the sector still depends on tourism, particularly from China. From January to November, Mainland Chinese tourist numbers grew 3.6 per cent year on year, compared to 3.1 per cent for all tourists.
Meanwhile, the Chinese government has slashed tariffs on 187 imported consumer goods, including wines and spirits, pharmaceuticals, and food. While this will strengthen domestic consumption in China, PWC says it will have only a modest effect on Hong Kong retail.
“Hong Kong still enjoys the world’s freest economy, providing high-quality goods under a well-established legal system that provides excellent consumer protection,” says PWC China tax partner Rebecca Wong. “This encourages legal imports and reduces the attractiveness of purchases made through irregular channels.”
However, Cheng says retailers need to transform, from being disrupted to becoming disruptors.
“Embracing technology and data to provide unique customer experiences through diversified platforms and logistics networks are the keys to success.”
