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Declining Consumer Confidence Impacts Luxury Sales in Hong Kong

by Madonna

Hong Kong experienced a decline in retail sales in May due to shifts in consumer spending habits and the strength of the local currency, according to the Census and Statistics Department. Sales of jewelry, watches, clocks, and valuable gifts fell by 21% year-on-year to HKD 4 billion ($511.5 million) during the month. Overall retail sales across all categories dropped by 12% to HKD 30.51 billion ($3.91 billion). This downturn follows decreases of 29% in hard luxury and 15% overall in April compared to the previous year.

One of the contributing factors to this decline is the challenging comparison with last year, when the reopening of the border between China and Hong Kong boosted tourism significantly. Hong Kong heavily relies on visitors, particularly from mainland China, for a significant portion of its luxury retail revenue. Additionally, the strength of the Hong Kong dollar relative to other currencies used by tourists has also dampened sales.


A government spokesperson highlighted, “The decline in retail sales in May reflects changes in both visitor and resident consumption patterns, as well as the impact of the strong Hong Kong dollar. The relatively high base for comparison from the same period last year is also a factor.”


In the first five months of the year, sales of hard luxury items decreased by 11% to HKD 22.23 billion ($2.85 billion). Across all retail categories, sales fell by 6% to HKD 161.52 billion ($20.68 billion) during this period.


Despite these challenges, the government remains optimistic about the sector’s outlook. “Looking ahead, the retail sector may continue to face challenges in the short term,” the spokesperson noted. “However, recent government initiatives aimed at benefiting Hong Kong, such as enhancements to the Individual Visit Scheme and increased duty-free allowances for mainland visitors, are expected to stimulate retail businesses. Moreover, improvements in employment earnings and stabilization in asset markets are positive signs for the sector.”


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