Retail sales in Hong Kong plunged by a record 25 per cent during the first 11 months of last year as the coronavirus pandemic kept big-spending tourists away and local consumers tightened their purse strings.
The health crisis would continue to pose challenges for retailers in the near-term, a government spokesman said.
Figures released by the Census and Statistics Department on Monday showed retail sales dropped by 25.3 per cent between January and November, compared to the same period in the year before, marking the worst performance since records began in 2004 and far exceeding the 11.1 per cent decline for all of 2019.
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Sales in November were down by 4 per cent, year on year, a slight easing over the 8.7 per cent drop recorded in October. Consumption dropped to HK$28.7 billion (US$3.70 billion), marking the 22nd consecutive month of contraction.
The government spokesman said the narrowing year-on-year decline was primarily due to the increase in sales at retail outlets of consumer durable goods. But the fourth wave of coronavirus infections had weighed on local consumption sentiment since the latter half of November, which would present a challenging environment for retailers in the near term.
The government has further extended social-distancing restrictions, and venues such as bars, spas and karaoke lounges must remain shut until at least January 20.
The Hong Kong Retail Management Association estimated nearly 60 per cent of retailers could shut down for good in the first quarter of this year, as consumer sentiment eroded.
Association chairwoman Annie Tse Yau On-yee estimated retail sales could fall by about 25 per cent in 2020 compared to 2019.
“Retailers that are driven by sales to tourists will take the hardest hit, such as jewellery, apparel, cosmetics and department stores,” Tse said. “Although foot traffic in shopping malls and shopping picked up during the Christmas period in December, the actual number of people going into shops to buy is not much.”
She added that consumers had been more frugal in recent months as job security was uncertain due to the pandemic.
Tse said retailers had been more conservative in purchasing stock for the coming Lunar New Year season in February, as they expected the health crisis to continue to dominate.
“I think the worst has passed because it’s already bad enough,” Tse said, “Of course, we are looking forward to business recovery, but it still takes time.”
The government’s HK$81 billion Employment Support Scheme ended in November, and in the face of job losses, consumers had to cut back on spending, denting Christmas and year-end sales.
The retail sector was worth HK$72.9 billion in 2019, representing 2.7 per cent of Hong Kong’s gross domestic product (GDP), with mainland Chinese shoppers accounting for the bulk of big-ticket purchases of luxury goods. About 261,000 people were working in the retail industry in 2019.
But with travel restricted due to the pandemic, shopping malls and retail stores must rely on local consumption.
The number of arrivals to Hong Kong slumped 93.2 per cent to 3.56 million over the first 11 months of 2020. In November last year, 3,571 mainland visitors entered the city, compared to 1.9 million in the same month the year before, a 99.8 per cent decline.
Spending on cosmetics and medicines – previously popular among mainland Chinese shoppers – plunged 34.8 per cent to HK$1.6 billion in November, year on year, while sales of expensive items such as jewellery, watches and clocks fell 16.1 per cent to HK$2.8 billion. But electronic goods and consumer durables saw a 22 per cent uptick.
The city on Monday added 53 new coronavirus cases, taking the total infection tally to 9,017 with 151 related deaths.