Hong Kong retail is on track to match or even exceed its record 2013 sales within the next five years, according to a senior PricewaterhouseCoopers (PwC) consultant.
In an interview with HKTDC’s online magazine Hong Kong Means Business, Michael Cheng, the Asia Pacific & Hong Kong/China consumer markets leader with the international accounting and consulting firm, said last year’s 2.2 per cent rise in retail sales was driven by record high stock and real estate markets which buoyed consumer sentiment. Rebounding visitor numbers from the mainland were also a major contributing factor.
He is bullish about the market during the next few years, citing low unemployment and a recent weakening of the US dollar against major currencies.
“PwC expects that Hong Kong’s retail sector should be recovering well in the medium term and exceed the all-time high of 2013 within the next five years,” he said.
A further positive omen was that December’s sales were up 5.8 per cent on the previous year to HK$44.8 billion, representing the strongest month since 2013.
Official retail sales figures for January are scheduled to be released late tomorrow, (Friday), and there have already been positive reports about February, which included Lunar New Year. Beauty products retailer Sa Sa International has reported a 16 per cent lift in sales over the February 16-22 holiday period and immigration officials say visitor numbers from the mainland rose 14.5 per cent.
But Cheng cautions retailers not to take the reversal of fortunes for granted.
“For Hong Kong and even global retailers to win over the longer term, they need to be a game changer within their industry. Retailers need to transform themselves: from being disrupted to being a disruptor. Embracing technology and data in order to provide unique customer experiences through diversified platforms and logistics networks are the keys to success.”
He says the territory’s advantage as a retail hub is that it still enjoys the position as the world’s freest economy, providing high-quality and trustworthy goods, under a well-established legal system that provides confidence and excellent consumer experience.
“This encourages legal imports and reduces the attractiveness of purchases made through irregular channels, thus bringing long-term benefits to both Hong Kong and the Chinese mainland retail sectors, as well as to promote consumption upgrade in the mainland.”
Cheng predicts a solid year for luxury goods and watch and jewellery retailers after a 5.2 per cent improvement last year.
“Despite some store consolidation and a retreat from main street locations, luxury goods, especially jewellery and watches, was one of the best-performing sectors in 2017. This luxury category is expected to further recover this year, contributing to a further improvement in overall retail sales in Hong Kong this year and onwards.
And he is unconcerned about the Chinese government’s recent culling of import tariffs on 187 categories of imported consumer goods, including wines and spirits, food and pharmaceuticals.
“While PwC believes this policy will strengthen domestic consumption in China, it also argues that it will have only a modest effect on Hong Kong retail.”
