Easter gloom for Hong Kong retail sector with some owners expecting business to have fallen 40%, trade group says

“Landlords are still considering increasing rents. This will only make the survival of our industry even tougher.”

The city’s largest retail association earlier surveyed 31,000 employees from 3,800 shops about the industry’s prospects for March and April.

More than 70 per cent of respondents said they expected sales to decrease, ranging from a single-digit percentage drop to as much as 40 per cent, according to Tse.

Only 14 per cent said they believed there would be a single-digit or low-double-digit increase in sales in March.

“A lack of momentum from tourists, a weak local market and the impact of cross-border travel made the overall mood in March not very good,” Tse said.

“It was way below expectations, even though expectations were already low.”

Tse offered the downbeat assessment shortly after official statistics showed retail sales growth tapered off in February, rising 1.9 per cent year on year to HK$33.8 billion, among the lowest increases in more than 12 months.

Provisional figure released by the Census and Statistics Department also showed retail sales in the first two months of 2024, which included Lunar New Year, rose 1.4 per cent over the same period in 2023.

The department said combining the figures for the two months made more sense because of Lunar New Year, which fell in February this time and in January in 2023.

A government spokesman said considering the first two months together, the value of retail sales rose “modestly” over a year earlier.

‘Miserable’: Hong Kong restaurants lament drop in business over Easter holiday

“As handling capacity continues to recover and more mega events are staged, inbound tourism is expected to revive further and benefit the retail sector,” he said.

“Rising household income and the government’s initiatives in boosting consumption sentiment should also provide support.

“Changes in consumption patterns of residents and visitors will continue to pose challenges.”

Retail sales growth in February was slightly higher than the 0.9 per cent increase in January, but the figure was among the lowest since December 2022 when a 1.2 per cent rise was logged.

In terms of monthly performance between January 2023 and December 2023, year-on-year growth varied between 5.8 per cent and 40.8 per cent.

The association’s Tse noted sales in February were worse than in January despite the Lunar New Year long holiday.

Government statistics showed retail sales in January were HK$36.5 billion, HK$2.7 billion more than in February.

Association executive director Bond Law Chen-pang forecast first-half retail sales might fall by single to double digits, while some retailers were facing rent rises of 14 to 30 per cent.

He urged landlords to suspend rent increases to “give the industry some breathing space”.

Hong Kong malls offer free parking as 541,000 people leave city for Easter break

Natixis Corporate and Investment Bank earlier downgraded its forecast for retail sales this year to a 2 per cent decline from a 3 per cent rise. Senior economist Gary Ng Cheuk-yan pointed to a lack of competitiveness with neighbouring cities.

“Cities such as Shenzhen had a decent development in the retail and catering sectors during Covid-19,” he said.

“Although a net outflow of people from Hong Kong during long holidays is true, we cannot ignore that Hong Kong fails to attract tourists. It is unsolvable in the short term.”

He said it was a result of Hong Kong authorities promoting further integration with mainland China.

“When the time cost decreases, people will naturally go to cheaper places,” he said.

Over the four-day Easter holiday from last Friday to Monday, Hong Kong recorded an outflow of more than 1.7 million people, while only about 400,000 tourists visited the city from the mainland and abroad.