Concrete Analysis | The jury is still out on the prospects for Hong Kong’s retail reinvention
Structurally the industry remains reliant on visitors from mainland China, making it vulnerable to shifts in travel patterns
Just over a year ago, Hong Kong’s retail industry had just emerged from a period dogged by deteriorating sales caused by falling visitor arrivals, in particular those from mainland China who were responsible for the lion’s share of spending on luxury goods.
After the prolonged downturn, the city’s retail sales value increased during most of 2017, as an improved business atmosphere and a rebounding yuan currency encouraged mainland Chinese visitors to come back to Hong Kong.
But this recovery should not obscure the fact that the heyday of Hong Kong retail is unlikely to return. Changes in mainland Chinese visitors’ spending patterns from high-end to mid-priced products mean that the Hong Kong retail industry is no longer able to rely on luxury sales.
Meanwhile, hobbled by an inflexible exchange rate regime, the proliferation of online shopping and intense competition from neighbouring economies, Hong Kong’s retail industry has had to devise innovative ways, such as experience-based retailing, to stay in the game.
Nowhere is experience-based consumption more evident than in the food and beverage (F&B) sector, which has become an increasingly important part of Hong Kong tourism.
With the popularity of online shopping, Hong Kong’s conventional competitive advantage in attracting mainland Chinese shoppers has been diminishing in recent years. However, local experiences and the cultural elements of a city cannot be enjoyed online, and Hong Kong has a wealth of unique heritage and cultural traditions that other Chinese cities cannot offer. Its local food scene is one of them.
