Retail sales to grow 17% YoY in 2023 – PwC

This is equivalent to HK$408b.

Overall retail sales in 2023 are forecast to jump 17% year-on-year (YoY) to HK$408b, according to PwC Hong Kong,

In the first half of the year, sales of retail goods jumped 20.7%, driven by economic reopening and tourist arrivals.

Additionally, the government's distribution of consumption vouchers has energised the retail sector.

“The government could also try to attract more Southeast Asian tourists, to tap into the region’s growing travel demand, diversify its visitor base and leverage the economic opportunities presented by the emerging middle class in Southeast Asia,” Michael Cheng, PwC Asia Pacific, Mainland China and Hong Kong Consumer Markets Leader said.

“We expect that it will take at least 12 to 18 months, assuming no new major issues affect the global economy, to reach the level of retail sales we had prior to the outbreak of COVID-19.” Cheng expressed.

Meanwhile, Hong Kong's online sales have decreased from HK$15.6b to HK$14.7b, constituting 7.1% of total sales, as of end-June.

This is in comparison to 9.2% during the same period last year and 9.9% of total sales for all of 2022. 

PwC Hong Kong foresees a minor decline in online retail sales for 2023. Online shopping has become ingrained in many consumers' routines. 

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China’s potential to attract foreign brands

The PwC Global Consumer Insights Survey China report for 2023 has uncovered that China's economic normalisation provides a favourable opportunity for foreign brands to establish a local presence. 

Concurrently, domestic brands can expand beyond China by leveraging cross-border e-commerce. As Chinese consumers eagerly embrace their pre-pandemic routines, including in-store shopping and travel, competition has intensified. 

Success now hinges on brands delivering an exceptional customer experience while addressing friction points along the purchase journey, both online and offline.

Amid persistent trends, Chinese consumers continue to grapple with financial uncertainty, leading to a more cautious approach to spending and a rebalancing of expenditures across various categories. The majority of surveyed consumers plan to adopt cost-saving behaviours over the coming six months.

Retailers can chart new avenues for sustainable growth by harnessing the power of brand storytelling and emphasising non-price attributes across borders.

Advanced chatbot technology is gaining ground in consumer markets. Among appealing chatbot functions, Chinese consumers highlight searching for product information, personalizing offers, receiving product alerts and updates, and enhancing customer services and support.

Amidst the persistent complexities of the global economic landscape, entering the Chinese market and establishing an online presence are seen by many overseas brands as vital growth outlets, emphasised PwC.

The relaxation of restrictions on social activities and short-distance travel has spurred growth in areas like alcoholic beverages, camping, cycling, outdoor pursuits, and pet-related consumption. Moreover, the demand for high-quality healthcare has fueled the popularity of health and beauty-oriented food and beverages among discerning consumers.