HK total retail sales to reach $360b in 2021: PwC
Retailers are embracing new consumer behaviour in the age of "bricks and clicks."
PwC’s Global Consumer Insights Survey 2021 China Report shows that retail sales will grow by just 10% to approximately $360b for the full year of 2021. The unstable macro-economic backdrop and the ongoing impact of COVID-19 have prompted Mainland Chinese retailers to increasingly focus on new retail transformation and enhancing the consumer experience.
“Hong Kong retail sales are estimated to increase by 10% to approximately $360b in 2021. This is lower than our earlier forecast in February of an increase of 15% to $376b. The readjustment is due to the fact that the anticipated border reopening between Hong Kong and Mainland China in the fourth quarter is not likely to materialise, and that the city's retail sales are still primarily driven by local consumers," said Hong Kong consumer markets leader Michael Cheng.
"The pandemic has reminded us that economic pursuit must be accompanied by management of resources for a sustainable future. Sustainability-based consumption, coupled with an embrace of ESG initiatives, is a huge opportunity for value creation. Brands will have to articulate meaningful value propositions and demonstrate their ESG relevance to win customers, given the increasing cultural sensitivity accentuated by social media. It is time for retail companies to take ESG issues as a strategic priority, act on the key matters that resonate strongly with their stakeholders and complement the nature of their business and their brand value, rather than just focusing on short-term profits. Retailers are advised to strategically invest in sustainability with a mindset that key business decisions should be viewed through an ESG lens,” said ESG services partner Sammie Leung.
Total retail sales in Hong Kong for the first seven months of 2021 increased by 7.6%. Among different segments, jewellery and luxury gifts recorded the fastest growth, with a rise of 32.7% during the pandemic because of consumers' "revenge spending" behaviour, as well as their strong desire to acquire luxury branded items as a tool to hedge inflation and preserve wealth. The next two fastest-growing segments were clothing and footwear and electrical goods.
Medicines and cosmetics, meanwhile, suffered a drop of 2.1%, and supermarkets were down 11.1% from a high base last year, which was driven by higher than usual supermarket shopping due to the onset of COVID-19.
With local and global vaccination rates gradually rising, limited cross-border travel is expected to resume this year. To test the waters, Hong Kong re-opened the border with Mainland China on 15 September.