Hong Kong Retail Management Association: Hong Kong's retail market remains weak in the second half of the year, with an increase in tourists but a decrease in spending power, which has little impact on the industry.

The Hong Kong Government Census and Statistics Department announced that the temporary estimate of total retail sales value in June was 30.1 billion Hong Kong dollars, a year-on-year increase of 0.7%, which was lower than the market's expected increase of 1.4% and lower than the 2.4% increase in May. In response to this, the Executive Director of the Hong Kong Retail Management Association, Benjamin Lo, stated that in June of last year, there was a super low base number, as the figures did not exceed 30 billion Hong Kong dollars at that time. Since the beginning of this year, the month-on-month decline has gradually narrowed. He mentioned that some retail categories with larger declines are related to the local market in Hong Kong, indicating that local consumer spending is still weak and citizens are spending cautiously. Benjamin Lo stated that with the strong Hong Kong dollar and weak economy, it is difficult for the retail sector to see significant improvement in the short term. It is expected that the retail market in Hong Kong will remain weak in the second half of the year, despite an increase in tourists during this period that may drive some additional business. The Hong Kong Retail Management Association also noted that the retail industry is facing various challenges, including rising rents and labor costs, and the industry is working on transformation. In a survey of 3,000 store respondents by the Hong Kong Retail Management Association on retail in July, based on the super low base number from July last year, only 30% of the surveyed companies reported single-digit and low double-digit increases in business, 30% reported stable business, and 40% reported declining business, with declines ranging from single digits to low double digits. There was a significant improvement in foot traffic in July, mainly in tourist areas, which had a positive impact on retail market categories targeting tourists. However, tourist spending power and price are relatively low, so there may not be a significant increase in business. Due to bad weather in July, local residents traveling out or northward resulted in continued weak consumer spending, which had a negative impact on the retail industry. Both tourists and locals are more cautious in their spending. Some categories with large declines are related to the local market, similar to June. Regarding foot traffic and business conditions, over 50% of the surveyed companies reported that tourist business in July increased compared to June, 40.5% felt business was stable month-on-month, and only about 5% of companies reported a decrease. Regarding local customers, 50% of the surveyed companies reported that foot traffic remained stable compared to June, with only 41% of companies reporting an increase, indicating that local consumer spending in the Hong Kong market remains weak. Business performance and foot traffic are similar, with 41% of companies reporting an increase in business and 20% reporting a decrease. As for the overall summer holiday season in July and August, Benjamin Lo stated that compared to 2024, 40% of the surveyed companies expected business to increase by single digits to low double digits, particularly in markets targeting tourists, such as cosmetics and jewelry, which are expected to see an increase over last year, though the increase will be single digits or low double digits, benefiting from the increase in tourist numbers. Personal care, supermarkets, and watch categories are expected to see single-digit growth during the summer holiday period. 30% of the surveyed companies expect business to remain stable, mainly in markets targeting the local Hong Kong market, such as eyewear stores and convenience stores. 30% anticipate a decrease, with declines ranging from single digits to low double digits, mainly targeting the local market, including food and appliances. Overall, the surveyed companies expect an increase in tourist numbers in July and August, but with lower spending power and prices than before, there will not be a significant increase for the industry.