The glass door of China Life Insurance building in Wan Chai was smashed by rioters, Jan 1, 2020. (File photo: China Daily)
Hong Kong retail sales are expected to decline 2.5 percent year-on-year to HK$420 billion in 2020, as current uncertainties continue to weaken consumption and reduce tourist arrivals, business services firm PwC predicted.
Annual retail sales for 2019 are estimated to decline by 11.2 percent to HK$431 billion, after local consumer market suffering badly from the second half of 2019 with October recording a 24.3 percent decrease in sales – the largest monthly decline on record.
Retail sales in December are expected to bounce back a little – as consumer confidence improved slightly during the Christmas and New Year holidays, said Michael Cheng Wun-yin, consumer markets leader of PwC Asia Pacific, Hong Kong and the Chinese mainland.
Many predict 2020 will remain a challenging year for Hong Kong's retail market. "The full-year drop will narrow," said Cheng. "But we will still see a double-digit decline in the first half of 2020 considering the high comparison base during the same time last year. And there may be some incidents in society again which affect the retail market in the second half."
He said it was really difficult to make such a forecast for 2020 - as so many uncertainties remain. But there is no doubt that if social incidents continue this year, the "chilly winter" of the retail market will not end.
The good news is a slump in the luxury products sector is likely to end. Gold and jewelry products could see an increase in demand during the Spring Festival later this month.
Cheng said he was surprised to see that luxury brand Louis Vuitton plans to close its stores in Times Square in Causeway Bay - after negotiations with the mall to cut rents fell apart.
He believes the rentals, long considered the biggest challenge facing the city, will drop 20 or 30 percent this year.
Moreover, sales of electrical goods will also improve in 2020, thanks to launch of 5G services on the Chinese mainland and the expected release of 5G mobile phones, Cheng said.
In comparison, cosmetics and department stores are likely to remain lackluster, due to a drop in mainland tourist arrivals.
The retail market in Hong Kong, susceptible to fluctuations in mainland visitor arrivals, suffered a 10 percent fall in the first 11 months of 2019 to 52.72 million.
Cheng hopes local retailers will make a greater effort, including more promotions, to attract consumers and also to stimulate consumption.