Hong Kong retail regains lost momentum

Retail sales in Hong Kong have grown 13.9 percent year-over-year so far this year, reaching record levels comparable to the previous market peak, according to Colliers International. Millennials and Generation Z have been driving the retail market toward more lifestyle consumption and experiential shopping.

In addition, tourists have helped to stimulate local spending, lifting overall private consumption expenditure by 8.6 percent year-over-year in first quarter 2018, according to Hong Kong’s Census and Statistics. More than 16 million mainland travelers visited Hong Kong in the first four months of this year, 13.2 percent more compared with same period of 2017, according to the Hong Kong Tourism Board.

Retail sales may grow faster than expected based on strong results in the first quarter and second quarter, followed by a strong summer and a busy year-end period. The scheduled opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, combined with the launch of the Hong Kong-Zhuhai-Macao bridge should bring in more mainland tourists in time for the October “Golden Week.”

Hong Kong continues to be the destination for international brands entering Asia and the Greater China market. In addition to international brands, Asian and mainland Chinese brands also have been active in searching for the right locations. Although retail rents remain the highest in the region, many retailers have been able to achieve higher margins in Hong Kong than in other countries.

Colliers International expects retail sales growth of 8 percent to 10 percent year-over-year for 2018. Despite the positive environment, retailers will have to keep evolving their services in-store and online to optimally engage with their consumers and achieve a healthy and sustainable growth.