Mainland visitors key to Hong Kong’s retail rebound

What happened Over the past year, while brands like Hermès and Prada have announced their comebacks in post-pandemic, fully-reopened Hong Kong — it seems the city’s full retail recovery will take more time. In June, Hong Kong saw a 9.7% drop in retail sales compared to the year before, according to a government report released in early August. Sales fell to $3.83 billion, after dropping by 11.5% in May. Retail sales in the region have declined for four months since February 2024. The Hong Kong retail market is "facing a difficult moment now and the industry will remain weak, and this will last until the end of this year”. Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association told Reuters. The Jing Take Once a global fashion and luxury shopping hub, Hong Kong’s decreased appetite for retail has not deterred the brands who have their eye on the a key returning demographic: mainland Chinese visitors. While local Hong Kong residents and businesses have been cited for statement such as “the city is dead” — the international East-meets-West appeal of Hong Kong endures for some mainland Chinese. According to ABC News, over 100,000 mainland Chinese have moved to the Special Administrative Region over the last few years. In an attempt to attract more workers to the city amid a drop in skilled labour due to the COVID-19 pandemic and in the aftermath of the city’s 2019 pro-democracy demonstrations, Beijing is providing a variety of incentives to mainland migrants, according to the same report. The "Top Talent Scheme" was introduced by the Hong Kong government in late 2022 to attract individuals to relocate to the city if they had either earned more than $489,000, or graduated from one of the top 100 colleges in the world. Since its launch, about 70,000 applications have been accepted, with over 90% of those being candidates from the mainland. Beyond migration, tourism from the mainland is also increasingly promoted. In April 2024, there were approximately 3.5 million visitors to Hong Kong overall; mainland tourists comprised 2.5 million of that figure. And amid the sluggish consumer sentiment plaguing the city, it seems brands and retailers that appeal to this group have seen greater success. New World Development-owned cultural-retail space K11 MUSEA, notably saw a record-setting 40% increase in foot traffic on the first day of the year. For brands in Hong Kong, the current retail landscape presents both challenges and opportunities. While the city’s overall retail sales have been declining, targeting mainland Chinese consumers who continue to be drawn to Hong Kong’s unique appeal could yield positive results. Brands that successfully engage this audience, such as K11 MUSEA, Prada and Hermès, may yet still find a path to growth despite broader market challenges.

Mainland visitors key to Hong Kong’s retail rebound

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Published August 12, 2024

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Mainland visitors key to Hong Kong’s retail rebound