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News Release

HONG KONG

Hong Kong Retail Evolves as Sales Surge

Optimism abounds, with visitor arrivals and local spending increasing


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After an almost four-year correction in Hong Kong's retail market, the outlook for retailers is looking rosier. 90% of the international and local retailers participating in a recent JLL survey said their sales increased in the first half of 2018 compared to the same period in 2017.

That's supported by government figures which show total retail sales are on the rise—an increase of 13.4% year-on-year in the first six months of 2018. An increase in mainland visitor arrivals and local consumer sentiment, boosted by the city's strong stock and property markets, is behind the rise in sales.

The retailers we surveyed expressed a lot of confidence in the market, and foresee stability and opportunities for growth. They anticipated like-for-like sales to grow by more than 10% in the second half of 2018, and their optimism prompted 83% of them to say they plan to open new stores in Hong Kong in the next twelve months. Last year, just 62% said they would expand.

AP-HK-RET-Blog-Retailer-Survey-0818-GFXl-Image.jpg James Assersohn, a Director with our Asia Pacific Retail team, believes Hong Kong is always going to be important for international retailers as a gateway to China and as one of the world's international cities. "They need to have a strong presence here, and with visitor arrivals up, it's getting easier for brands to convince their head offices to open stores," he explains. "We're also seeing more Mainland visitors traveling independently—rather than as part of tour groups—and they are looking for experiences, as well as shopping."

As retailers adapt their strategies, fresh opportunities for growth are emerging. While previous market dynamics, such as mainland Chinese shoppers and sales of luxury goods continue to be important, it is mid-priced brands aimed at millennials and Generation Z shoppers and the enhanced role of F&B in shopping districts and malls that are now shaping the city's retail landscape.

Although Central, Causeway Bay and Tsim Sha Tsui remain predominantly luxury retail hubs—the hard luxury sector experienced 27.8% growth year-on-year in June—the presence of affordable brands in other shopping districts is growing at a swift pace, and they are expected to remain one of the main sources of leasing demand this year and beyond. Cosmetics remain a high-growth sector, while department stores and supermarkets have seen also higher commodity sales in recent months.

AP-HK-RET-Blog-Retailer-Survey-0818-Quote-Image.jpgIncreased spending by local shoppers provides a more sustainable growth trajectory for retail businesses, notes Assersohn, but he warns that bricks-and-mortar retailers should embrace online sales to maximise their impact in the market.

"Consumers are becoming more and more knowledgeable about what they want and are using the internet to check pricing before they shop," he says. "In this period of surging double digit retail sales, retailers that don't have their finger on the pulse and that can't keep up with the trend will not keep customers coming back."

Find out how we can help you expand your retail business in Hong Kong by visiting our Retail webpage, or contact James Assersohn