What: Hong Kong retail sales rose 1.8% in July 2025, supported by a 12% increase in tourist arrivals, but overall spending remains subdued due to changing visitor behaviour and currency effects.

Why it is important: The disconnect between higher visitor numbers and actual retail spending highlights the need for new strategies as luxury and apparel categories underperform.

Hong Kong’s retail sector recorded a modest 1.8% year-on-year sales increase in July 2025, reaching HK$29.7 billion, as tourist arrivals surged by 12% to 4.39 million. The majority of these visitors came from Mainland China, yet many were day-trippers whose limited spending failed to translate into significant retail gains. While this marks the third consecutive month of growth, the overall retail environment remains fragile, with sales for the first seven months of the year still down 2.6% in value and 4.0% in volume compared to 2024. The strong Hong Kong dollar continues to encourage local residents to shop across the border, further dampening domestic retail activity. Jewellery, watches, and valuable gifts saw a notable 9.4% increase in July, but apparel and footwear categories barely recovered from previous declines. Despite government efforts to stimulate the sector through tourism promotion and mega events, the persistent gap between rising visitor numbers and actual spending signals a fundamental shift in consumer behavior, requiring retailers to rethink their strategies for sustainable growth.

IADS Notes:

Recent months have shown that increased tourist arrivals, particularly from Mainland China, no longer guarantee retail growth in Hong Kong. March and June 2025 data reveal that “special forces” tourists now prioritize experiences over shopping, leading to lower per-visitor spending. The strong Hong Kong dollar has further complicated the landscape, deterring tourist purchases and driving locals to shop in mainland China. Despite government initiatives such as multiple-entry visas and mega events, retail sales continue to lag, especially in luxury and apparel categories, highlighting the need for a strategic shift toward experience-driven and adaptive retail models.

Hong Kong retail sales gain 1.8% in July amid rising tourist traffic