HK state of retail dips further as fifth wave impacts consumers' eagerness to spend

Hong Kong’s retail sales has dropped in June from a year earlier, while the value of online retail sales has slightly increased compared to the same month last year.

According to the Census and Statistics Department (C&SD)’s latest figures on retail sales released on 2 August 2022, the value of total retail sales in June provisionally estimated at HK$27.7 billion, decreased by 1.2% compared with the same month in 2021. The revised estimate of the value of total retail sales in May 2022 decreased by 1.6% compared with a year earlier. For the first half of 2022, it was provisionally estimated that the value of total retail sales decreased by 2.6% compared with the same period in 2021.

Analysed by broad type of retail outlet in descending order of the provisional estimate of the value of sales and comparing June 2022 with June 2021, the value of sales of commodities in supermarkets decreased by 0.3%. This was followed by sales of commodities in department stores (-2.4% in value); wearing apparel (-4.0%); electrical goods and other consumer durable goods not elsewhere classified (-13.3%); medicines and cosmetics (-1.7%); motor vehicles and parts (-10.9%); furniture and fixtures (-1.8%); and footwear, allied products and other clothing accessories (-8.6%).

Out of the total retail sales in June, the online sales accounted for 8.2%, with the value of online retail sales in that month provisionally estimated at HK$2.3 billion, increased by 0.5% compared with the same month in 2021. The revised estimate of online retail sales in May 2022 increased by 2.9% compared with a year earlier. For the first half of 2022, it was provisionally estimated that the value of online retail sales increased by 24.0% compared with the same period in 2021.

After netting out the effect of price changes over the same period, the provisional estimate of the volume of total retail sales in June 2022 decreased by 4.1% compared with a year earlier. The revised estimate of the volume of total retail sales in May 2022 decreased by 4.8% compared with a year earlier. For the first half of 2022, the provisional estimate of the total retail sales decreased by 5.6% in volume compared with the same period in 2021.

In a conversation with MARKETING-INTERACTIVE, Peter Shiu, the Liberal lawmaker representing the wholesale and retail functional constituency of Legco, said that the closed borders and the aftermath of the fifth wave of the pandemic in Hong Kong has greatly impacted consumers’ eagerness to spend. “While online retail sales for June increased 0.5% year-on-year, it doesn’t mean the industry has fully recovered, consumers’ mood is affected by the pandemic. Hopefully the sales of retail sector would improve after the release of second phase of consumption vouchers,” Shiu added.  

Commenting on the phenomenon, Hong Kong Retail Management Association (HKRMA) said that it believes the main reason for decrease is the effect of first phase 2022 consumption voucher went light in June. Besides, poor economy environment has changed the purchasing behavior of the citizens, people become more cautious on shopping.

A spokesman from C&SD said that retail sales performance improved in the second quarter, with the value of retail sales rebounding sharply from the first quarter and reverting to mild year-on-year growth. Yet the momentum softened in the latter part of the quarter alongside the increased number of local COVID-19 cases and sharp interest rate hikes by many major central banks, with retail sales value registering a modest year-on-year decline in June.

Looking ahead, the spokesman pointed out that the upcoming disbursement of Phase II consumption vouchers will help support consumption demand, but retail sales performance down the road will also be dependent on how the local epidemic evolves and how the tighter financial conditions affect consumer's spending power and sentiment. It remains vital for the community to work in unison with the Government to keep the epidemic under control.

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