Hong Kong’s protracted retail slump finally turned around in February, jumping 30 per cent from the same period last year when sales hit a record low as the coronavirus pandemic began to hobble the global economy.
Provisional figures released by the Census and Statistics Department on Tuesday showed retail sales totalled HK$29.5 billion (US$3.8 billion) in February. For the first two months of 2021 combined, the retail sales value rose 2.7 per cent compared with a year ago.
Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association (HKRMA), said that after a devastating 2020, the sector was still a long way from recovering despite the strong growth at the beginning of this year.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
“We have been suffering tremendously since February last year, and we foresee that even though in the coming months we expect positive growth, that will be purely based on the low base of last year,” she said.
Retail sales tumbled by a record 44 per cent in February 2020 as the impact of the coronavirus on the economy and consumer sentiment began to make itself felt, and as countries began imposing lockdowns and social-distancing restrictions. Total retail value at that time plunged to HK$22.7 billion from HK$40.6 billion in February 2019.
A government spokesman said the sharp increase in retail sales last month was something of a distortion, reflecting not only the different timing of Lunar New Year – which ran from February 12 to 15 – but also the exceptionally low base of comparison from the year before.
The spokesman pointed out that the retail trade would continue to face a difficult business environment in the near term as inbound tourism remained practically nonexistent.
Shopping centres and retail stores this year were forced to rely only on severely dampened local consumer spending during Lunar New Year – historically the peak time for sales – rather than benefiting from the droves of big-spending tourists who usually visit the city from mainland China over the holiday.
Local businesses have been starved of tourists for more than a year, with the city almost totally locked down to non-residents, and all but three border checkpoints – the Hong Kong-Zhuhai-Macau Bridge, Shenzhen Bay Port and the airport – closed.
The government said about 6.1 per cent of sales in February were generated from online transactions, totalling HK$1.8 billion. That figure was 56.6 per cent higher than it was in the same month a year ago.
By category, sales of electronic goods and consumer durables performed the best, reaching a growth of 34.3 per cent, climbing from a low base as well.
Supermarket sales, which surged at the start of the pandemic, dropped 8.6 per cent in the first two months of this year.
Tse believed there was a better chance for a substantial recovery in sales of household items and daily goods, as those categories had always counted on local buyers. In contrast, sales typically generated through tourism, such as jewellery, apparel and cosmetics would suffer as long as the city’s borders remained closed.
In a poll of HKRMA’s members, about half said they would continue to shut their physical stores into the second quarter, with some companies indicating a 20 per cent reduction of their branches.
In a bid to revive retail, Hong Kong’s finance minister Paul Chan Mo-po announced in the 2021-22 budget that residents would receive HK$5,000 in electronic spending vouchers to stimulate local consumption. The vouchers are expected to be rolled out in instalments across five months, possibly as early as this summer, in the hope it will encourage people to spend at local retailers and restaurants.
While the retail sector welcomed the plan, Tse said there had been no updates or discussions between the industry and the government since the idea was introduced a month ago.
This article Hong Kong retail slump finally turns around in February, with sales jumping 30 per cent year on year first appeared on South China Morning Post