Michael Cheng (left), Chinese mainland and Hong Kong consumer markets leader at PwC Asia Pacific, and Cindy Ngan, climate and sustainability partner at PwC Hong Kong, speak at a news conference about the Hong Kong Retail Outlook for 2024 on Feb 8, 2024. (LI XIAOYUN/ CHINA DAILY)
Hong Kong could see a 5 percent year-on-year growth in retail sales this year, with the local market expected to be affected by factors including uncertainties in the equity and real estate markets and the currency fluctuation between the Hong Kong dollar and renminbi, PwC said on Thursday.
According to the professional services provider’s latest analysis, retail sales in the city are expected to reach HK$428 billion ($54.73) in 2024. The recovery could be more significant in the second half of the year, as global interest rates are forecast to gradually ease from the second quarter, facilitating the recovery of stock and property markets.
The possible appreciation of the renminbi is expected to narrow the price gap between Hong Kong and the Chinese mainland, encouraging Hong Kong residents to opt for local consumption as the current craze for cross-boundary shopping fades, while bringing more mainland tourists back to the city
The possible appreciation of the renminbi is expected to narrow the price gap between Hong Kong and the Chinese mainland, encouraging Hong Kong residents to opt for local consumption as the current craze for cross-boundary shopping fades, while bringing more mainland tourists back to the city.
“We expect Hong Kong’s local retail to improve, as inbound tourism continues to pick up and Hong Kong residents’ outbound travel rush may recede,” said Michael Cheng, Chinese mainland and Hong Kong consumer markets leader at PwC Asia Pacific.
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The growth in retail sales this year is projected to be primarily driven by department stores, medicines and cosmetics, and luxury goods sectors, with the three sub-categories also showing substantial growth in 2023, PwC’s analysis indicates.
The recovery of the sub-categories is expected to gain further momentum, as the completion and opening of The Twins complex and the Kai Tak Sports Park in East Kowloon, scheduled for September this year and 2025 respectively, are poised to catalyze the development of the area into a hub for retail and leisure activities.
“We encourage the government to improve the transportation network around the area in order to create an easily accessible and multi-functional platform that agilely caters to the evolving needs of tourists,” PwC said.
The outlook for total retail sales is made based on the performance of the sector in 2023, when the city’s retail sales saw a year-on-year growth of 16.2 percent to reach HK$406.7 billion, recovering to 84 percent of the pre-pandemic levels in 2018. The tourism sector remains a key driver, with over 34 million tourist arrivals in the past year.
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To revitalize the pandemic-affected retail sector, the special administrative region government has launched an array of initiatives in 2023, including the campaigns of “Hello Hong Kong” and “Night Vibes Hong Kong”.
“While these may have cheered the public’s sentiment in short term, a more sustainable recovery clearly requires more substantive and long-lasting initiatives,” Cheng said.
As the retail landscape in Hong Kong is influenced by a range of factors, Cheng said he believes retailers should take more proactive measures, such as leveraging automation and digitalization solutions, and adjusting business strategies to cater to the growing demand for eco-friendly products and services among consumers.
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In light of the government’s waste management policies, like charging for waste from Aug 1, and the potential cost increases derived from them, Cindy Ngan, climate and sustainability partner at PwC Hong Kong, said, “By embracing sustainable practices and aligning with evolving consumer values, retailers can not only mitigate the short-term costs but also unlock long-term benefits, including improved operational efficiency, reduced environmental impact, and enhanced brand reputation.”
