What: Hong Kong's retail sales dropped 3.5% year-on-year to HK$30.1 billion in March 2025, marking the 13th consecutive month of decline, while visitor numbers increased by 12.2%.

Why it is important: This continued downturn, occurring despite multiple government initiatives, signals a structural transformation in Hong Kong's retail landscape, challenging its position as Asia's premier shopping destination and highlighting the need for strategic adaptation.

Hong Kong's retail sector continues to face significant headwinds as March 2025 marks the thirteenth consecutive month of declining sales. The latest figures show a 3.5% year-on-year decrease to HK$30.1 billion, with sales volume falling 4.8% compared to the previous year. Despite welcoming 3.82 million visitors, a 12.2% increase from March 2024, the retail sector struggles to convert foot traffic into sales. The jewellery, watches, and valuable gifts category saw a 3.9% decline, while clothing and footwear experienced a more substantial 10.4% drop. The government acknowledges that while mainland China's economic growth and efforts to boost consumption through tourism and mega events might provide some support, the sector faces ongoing challenges from global economic uncertainties and evolving consumption patterns. The strong Hong Kong dollar continues to influence shopping behaviour, encouraging locals to shop across the border while affecting tourist spending power.

IADS Notes: Hong Kong's March 2025 retail decline of 3.5% represents the latest chapter in a prolonged downturn that has fundamentally transformed the city's retail landscape. The trend began gaining momentum in July 2024 when, despite increased duty-free quotas, sales continued to decline. By August 2024, analysis revealed tourist expenditure had plummeted to 48% below pre-pandemic levels, highlighting a growing disconnect between visitor numbers and actual spending. The situation worsened in November 2024, marking nine consecutive months of decline, leading to the government's March 2025 implementation of multiple-entry visas for Shenzhen residents. However, this initiative failed to reverse the trend, as evidenced by February 2025's 13% plunge, the steepest decline in a year. The current data suggests that Hong Kong's retail challenges stem from structural changes rather than cyclical factors, with the strong Hong Kong dollar and evolving consumer preferences reshaping the traditional relationship between tourism and retail performance.

Hong Kong retail sales fall further, with no reprise in sight