What: Hong Kong's retail sales fell 7.3% year-on-year in November 2024, marking nine consecutive months of decline despite increased visitor numbers and government stimulus measures.

Why it is important: The persistent downturn, occurring alongside major luxury retail investments, reveals a growing disconnect between retail capacity and actual consumer spending patterns in the Asian market.

Hong Kong's retail sector continues to face significant headwinds as November sales dropped to HK$31.7 billion, marking the ninth consecutive month of decline. Despite a notable 8.5% increase in visitor arrivals to 3.57 million and the presence of 2.56 million mainland Chinese tourists, retail performance remains subdued. The strong Hong Kong dollar has emerged as a key factor influencing spending patterns, alongside shifting consumption behaviours among both visitors and residents. The jewellery, watches, and valuable gifts sector experienced a 5.4% decline, while clothing and footwear sales dropped by 6.7%, highlighting broader challenges in the luxury retail segment. The government's initiatives, including the resumption of multiple-entry schemes for Shenzhen residents, have yet to significantly impact overall retail performance. This persistent decline in the first eleven months of 2024, with total retail sales value decreasing by 7.1%, suggests a fundamental transformation in Hong Kong's retail landscape.

IADS Notes: Hong Kong's retail sector has undergone significant changes throughout 2024. In July, the government increased duty-free quotas  to stimulate spending, while major luxury retailers demonstrated confidence through expansion plans, as seen in K11 Musea's announcement in September . However, these initiatives contrast sharply with the reality of declining sales, which began with an 11.8% drop in July  and continued through November. The persistence of this downturn, despite increased visitor numbers, suggests a fundamental shift in consumer behaviour rather than a cyclical decline.

Nine months of decline: Hong Kong retail sales fall 7.3 per cent in November