What: Hong Kong's retail sales declined 3.2% year-on-year to HKD 35.3 billion in January 2025, showing improvement from December's performance while highlighting ongoing sector-specific challenges and digital growth.

Why it is important: The data reveals the ongoing restructuring of Hong Kong's retail sector, where traditional metrics of success are being redefined by changing tourist spending patterns, digital adoption, and cross-border shopping dynamics.

Hong Kong's retail sector shows signs of stabilisation with January sales reaching HKD 35.3 billion, marking a 3.2% year-on-year decline, an improvement from December's 9.6% drop. Online commerce demonstrated resilience with a 3.5% growth, accounting for 6.9% of total retail sales. The performance varies significantly across sectors, with motor vehicles and parts experiencing the steepest decline at 52.6%, followed by furniture and fixtures at 26.4%, and jewellery and watches at 17.9%. However, some categories showed growth, including food and alcoholic drinks (up 10.9%) and footwear and clothing accessories (up 7.1%). The government attributes these mixed results partly to the earlier timing of the Lunar New Year and acknowledges that changing consumption patterns among visitors and residents continue to influence the retail landscape. While the Central Government's economic stimulus measures and rising employment earnings offer potential support, the sector faces ongoing adaptation challenges in response to evolving consumer behaviour.

IADS Notes: Hong Kong's January 2025 retail performance reflects ongoing structural changes in the city's retail landscape. While the 3.2% decline shows improvement from December 2024's 9.7% drop, the retail sector continues to face fundamental challenges. This aligns with findings from August 2024 showing tourist expenditure falling 48% below pre-pandemic levels , despite increased visitor numbers. The uneven recovery across sectors, documented in April 2024, emonstrates a clear divide between luxury and experiential retail versus traditional segments . July 2024 data revealed this pattern continuing with an 11.5% overall decline, though online sales showed strong growth of 21.9% , mirroring January's positive online performance. The ituation is further complicated by regional competition, as May 2024 analysis showed Hong Kong retailers struggling against cross-border shopping trends . These developments suggest that while the market is stabilising, the transformation of Hong Kong's retail sector requires continued adaptation to new consumer behaviours and regional dynamics.

Hong Kong retail sales decline continues