A Word About Hong Kong’s Retail Sales Collapse: It’s a Mess

Sales at luxury goods stores, once the largest category, collapsed by 86% since their peak in 2013-2014.

By Nick Corbishley, for WOLF STREET:

As Hong Kong tourist arrivals collapsed by 96% in February, with travel essentially banned since late January and borders to mainland China blocked, and with mainland visitors down 97.8%, retail sales at brick-and-mortar stores plunged 44% compared to February last year, the 13th month in row of year-over-year decline — and the sharpest yet — after having plunged 21% in January. But as you can see, this collapse in sales started long before COVID-19:

“The business environment of retail trade will remain extremely austere in the near term, as the COVID-19 pandemic has brought inbound tourism to a standstill and severely dented local consumption demand,” a government spokesman said.

Even before the arrival of Covid-19, Hong Kong had already clocked up two straight quarters of sharply shrinking GDP, mostly due to the political crisis that broke out last spring and escalated into a crescendo of violence in the summer. That crisis scared away many tourists from mainland China and elsewhere. Covid-19 did the rest.

The only types of stores that actually saw sales increases — in part powered by panic buying — in February were, according to the provisional data released by Hong Kong’s Census and Statistics Department:

  • Supermarkets and supermarket sections of department stores: +11.5%
  • Fish, poultry & livestock stores (fresh or frozen): +20.3%
  • Fruits & vegetables stores: +17.8%

All other categories saw declines, with some reaching deep into the collapse territory:

  • Luxury goods (jewelry, watches, valuable gifts, etc.): -78%.
  • Clothing, apparel, accessories & footwear: -72%.
  • Alcoholic drinks and tobacco: -68.6%
  • Department stores: -58%
  • Medicines and cosmetics stores: -57%
  • Books, newspapers, stationery and gifts: -46%
  • Other consumer goods: -34%
  • Optical shops: -33%
  • Durable consumer goods, including motor vehicles: -29
  • Fuels: -0.3%

A special word about the collapsing sales at luxury goods stores.

Sales at stores for jewelry, watches, valuable gifts, and the like peaked in 2013 and 2014, as measured in HK dollars. At the time, these stores were by far the largest category. This is where tourists went to drop money. And even though sales started to decline in the following years, these stores remained the largest category by sales volume through 2018. But in 2019, sales suddenly collapsed further, driven by social unrest and the plunge in tourism.

From February 2014 to February 2020, sales have collapsed by 87%, from HK$9.5 billion to HK$1.5 billion, and now among the also-rans, below the category even of stores that sell “fish, poultry & livestock (fresh or frozen).” This was the lowest level of sales in the data going back to 2004:

Will retail sales snap back? Hardly.

Hong Kong was fast to react when the first case was reported in January. It asked for social distancing, made virus mapping available, and put work-from-home measures in place, including for civil servants. But it never closed the restaurants. At first, the measures seemed to work. The pace of infections rapidly slowed, so much so that by March 2, those measures were relaxed, civil servants returned to the office, as did much of the private sector.

As soon as people began flocking back to work and buses and subways began to refill with commuters and bars and restaurants began teeming with thirsty, hungry punters, infections once again began rising, this time at a much quicker pace. Seeing this, the government not only reversed course on its easing of restrictions, it introduced newer, more stringent measures, including a ban on gatherings of more than four people, the blanket closure of cinemas, gyms and arcades and a mandatory ban on tourist arrivals to the city. This will further damage retail sales.

Retail landlords are trying to get through this.

Many Hong Kong-based retailers have already gone under or closed stores, and the vacancy rate in core shopping areas has surpassed 9%. And that is having ripple effects for brick-and-mortar property owners.

Hong Kong’s commercial real estate landlords were among the first in the world to begin offering rental relief to their tenants to help them weather the virus crisis — and in order for the landlords themselves to make it through the crisis. Henderson Land Development, the city’s third-largest developer which owns retail space in more than 20 shopping malls across the city, offered to slash rent by 60% last month. The company already took a 26% hit on its core profit last year. Those profits are likely to turn to losses this year.

“Hong Kong’s economic outlook is still hindered by unfavorable factors, including those stemming from the protracted local social unrest and spread of the novel coronavirus infection,” said the company in its annual results statement filed to the Hong Kong stock exchange late on Monday. “It is expected that the operating environment for the group’s various businesses will be challenging this year.”

With no end in sight to Hong Kong’s retail apocalypse or its Covid-19 containment measures, the broader economy expected to contract by a mind-watering 10% in the second quarter of this year, the word “challenging” is probably an understatement for a retail landlord. By Nick Corbishley, for WOLF STREET.

“We are temporarily a company with no product and no revenue.” Read... The $1.5 Trillion Global Tourism Industry Faces $450 Billion Collapse in Revenues, Based on Optimistic Assumptions

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  57 comments for “A Word About Hong Kong’s Retail Sales Collapse: It’s a Mess

  1. char says:

    Why did Alcoholic drinks and tobacco collapse?
    Are $1000 bottles of wine important part or are there other reasons

    • 2banana says:

      Yeah. That is kinda suprising.

      “Acoholic drinks and tobacco: -68.6%”

      • Wolf Richter says:

        Mainland Chinese tourists are being blocked from coming to Hong Kong. 50% of the men in China smoke. Going out and partying while on vacay or business trip is a classic pastime. But that’s not happening anymore.

        • Shiloh1 says:

          How is HSBC doing? Kyle Bass said they are the next DB.

        • char says:

          Cigarettes are much more taxed in HK than in China so i would expect the grey imports to be very important source of cigarettes smoked in HK. No more grey imports with a closed boarder. And i expect Chinese tourist, especially in a group, to smoke cigarettes bought in China

  2. William Smith says:

    Even if Hong Kong manages to stop the virus within its borders, all it will take is just one person on one flight to start the whole thing up again. The resurgence of the infections after easing restrictions means that restrictions must stay in place till the whole world is virus free or they find a vaccine/treatment. Both scenarios may be years away. At the very least, borders will have to stay closed for a very long time. So those retails who rely on tourism are pretty much toast. This is a harbinger for the rest of the world. The virus has shown that everything is connected. When European *travelers* came to the Americas, they brought with them diseases that the natives had no immunity to. The native population crashed. History always repeats.

    • Bill from Australia says:

      The world was never virus free, and never will be its being part of nature, being human.Its happened before, and it will happen again if you are waiting for a virus free world good luck!. Hope you have a good supply of single malt this could take some time. I am available to help in your hours of need.

      • intosh says:

        Silly. Nobody claimed the world was ever literally virus free or that anyone hoped that it will be that way. Obviously, when one says “virus free” today, it means “COVID-19-safe” (curable and manageable health threat).

    • Steven Smith says:

      What is needed now is a stop to the blame game, and an intense focus among the G20 to find solutions as a group. The meeting on 6 April between, USA, Russia, OPEC and non-OPEC may hopefully serve as an example of how countries can work together to arrive at a meaningful solution for the benefit of the global economy.

  3. Jon says:

    Even after so much turmoil ( social unrest and then this covid19) HK real estate barely moved down and still remains one of the most expensive real estate in the world.
    What a dichotomy !

    • Phoenix_Ikki says:

      Yeah real estate is treated like a religion over there, the mentality of housing generate wealth and the whole middle class dream status holds the same if not more weight over there. So even if there’s a price decrease it will take a long time for it to catch up. From top to bottom, it took US roughly US 4 yrs to bottom out on home prices in GFC. HK might not be the same since it’s unique in its situation in which government controls majority of the land and its development and artificially create scarcity, couple that with high concentration of population, money from mainland China, perhaps all one can hope for is a minor price correction.

    • Wolf Richter says:

      RE is very slow-moving. In the US the prior housing bust took four years.

    • Alex says:

      This downfall everywhere was on its way big time long before the C OVID, just look who suffered most in HK – those industries which were and are ridiculously overpriced, most likely heavily indebted like big companies in USA who got now billions of support from the Government. All happening now including commercial real estate etc is rooted in bubbles producing and to blame COVID is very convenient, but not helpful. They need a serious restructuring, otherwise this crisis will last for a long time, and will repeat itself more and more often. Just read numbers of ANNUAL FLU epidemics which cost hundreds of thousands of lives annually and we never have heard about them, now COVID has broken all economies?

  4. Rcohn says:

    Is the reduction in rents just for the short term or is it for the term of the lease

  5. Brant Lee says:

    “As soon as people began flocking back to work etc…Infections once again began rising, this time at a much quicker pace”.

    That’s what I’m wondering about for the U.S. Until a cure is found, will we have to remain locked down for fear of a relapse of this pandemic in public? Even the FED won’t be able to print money fast enough.

    • IdahoPotato says:

      From what I have read, most of the new cases in Japan, HK and South Korea are from international travellers.

    • Ravi says:

      The Fed and US govt will print as much as they can/want/need…..for the next 6-9 months. It can get away with it – for now. THE FUTURE BE DAMMED.

  6. tom says:

    So they put restrictions on from January to March 2nd….and it still took off when lifted.

    • MC01 says:

      Covid-19 was already in Italy around January 15, much sooner than anybody originally believed. Think about Hong Kong where thousands crossed the border with China every hour: the virus was probably already around in early January.

      From what we have seen this virus hits in “waves”: the first wave is very mild in form and unless the healthcare system is already in high alert it’s passed off as a seasonal disease. It’s at this stage that the virus spreads everywhere. The second wave follows shortly and seems to vary wildly in virulence: some areas (not countries) are barely affected while other get savaged. Nobody understands the reasons of this behavior. Then comes the third and apparently/hopefully final wave, which seems to once again be a very mild form. This third wave has already started in Korea and apparently in some parts of Italy.
      Right now Hong Kong is most likely in phase two. How virulent this wave will be nobody can tell, quite literally.

      This pattern of behavior is what makes lockdowns so ineffective: by the time they are in place the virus is already everywhere. Korea and Taiwan were vigilant and especially very lucky to activate their screening and containment program just in time: the rest of us will just have to ride it out and pray there’s a society and an economy to get back to when we are allowed to crawl out of our holes.

      • Jeff T says:

        Respectfully, I submit that the second wave will hit the United States this fall. Most likely after groups start gathering again.

  7. Petunia says:

    I hear the fashion houses have closed up shop in Europe and America as well. Some are not selling online, some are. Nobody is expecting prices to drop because they never dropped during the GFC 1.0, they only stop rising as fast.

    I checkout the lux store sales and don’t see much that is deeply discounted. In fact, I see sale merchandise being absorbed rather faster than normal. This crisis may be another boost to online sales.

    • Petunia says:


      HK was already in decline as a fashion buying destination before the protests and health crisis. Fashionistas were complaining, before all this trouble, that Asia was the most expensive place to shop for luxury goods. They preferred Paris.

    • Phoenix_Ikki says:

      Yeah I noticed this as well, being a watch guy, I spent a lot of time on Chrono24 and see if there’s any deal to be have, especially from retailer in HK on some of the popular to not so popular models. Most of the offers I got was barely off retail pricing. I could get better deal here in the US even before this whole COVID 19 mess. You would think with luxury sales collapsing this hard, they would want to unload some inventory asap but so far that’s not been case even for luxury goods, at least not online.

    • char says:

      Nobody can see how you’re dressed when you are at home.

      • Petunia says:

        Rich people entertain each other at home, home theaters, home discos, large pools, tennis courts, etc. They definitely dress up at home. You need to get out more.

        • char says:

          You’re right. Should have been.

          Nobody can see how you are dressed at home and you are not getting guest.

          Besides we are talking about HK. It is not custom to entertain at home and you need to be Gigarich to have a pool. The people in Happy Valley have small appartments in which you can’t really entertain more than a handful of people.

    • Danno says:

      The last thing I want to wear is new or fashionable clothes when the masses start targeting anyone that looks like they are secure.

      Dress shabby, grow a beard, have lit cig your hand and don’t look anyone in the eye would be more appropriate that worrying about on line sales and fashion.

      • Petunia says:

        You may think fashion is a frivolous business but it is probably the biggest private employer in the world. You need to read about it because it employs many in your community regardless of where you live.

        BTW, shabby jeans with holes put you in the 1%. They are among the most expensive. You need to rethink your look.

      • Drater says:

        They will jump you for the cigarette…

  8. Iamafan says:

    It ain’t just Hong Kong. It’s everywhere. Depression.

    Just talked to my brother. He’s stuck in SE Asia. When he jogs now, there’s nobody around.

    • Marcu Aurealis says:

      What does that mean? Nobody around?

      I’m here, and things are pretty much normal. Albeit you must take-out if you go to a restaurant, and you can’t drink beer in public, but at home its normal, My neighbors are all doing what they always do, my wife has 3 months off, and she’s sleeping in everyday for the first time in 25+ years.

      I concur the big city’s are bad. The foriegner’s have curfew everywhere, and they can’t come-or-go, but there’s a reason for this, the foriegners (tourists), or people who have left their se-asia country & returned are the virus carriers.

      I’m here remote 20+ year farmer, I go into town once a week, I did all my big shopping weeks ago before the lockdown’s began. Before the borders were closed. Now if I were to go to the big city you must wait in line, as only 10-20 are allowed at a time in the super-stores.

      All public transportation has halted, which yes would effect a tourist, but not a local, as everybody already had their own private transportation, which in se-asia means 100cc scooter.

      You have to wear a mask outside, but most already wore masks anyhow, tourists hate wearing masks. Had tourists been taught about 1918 flu, they would know. In SE-ASIA every child is taught about the 1918 flu, where every village saw +25% death, where corpses piled and were burned, and those that villages that wore ‘masks’ had lower incidence, they’re taught this, they know. Unlike the west who only know what Kardashian had for lunch.

    • Ricardo says:

      Iamafan : He can jog faster then :)

  9. James says:

    Tom…iHK wasn’t locked down until January 30 when the PRC from Wuhan disembarked the Diamond Princess in HK on Jan 25 & 5 days later ended up in the hospital system in HK after infecting his entire family! I know because I was on the DP & I was in HK on Jan 25. The “carrier”
    Unfortunately decided to board the vessel in Yokohama. So…HK wasn’t really locked down so long!

    • Paulo says:

      Wow, lucky you got off, period. I see the pax trying to escape off ship into Florida, and are now denied. Plus, there are several other cruise ships still wandering at sea. What a nightmare. Of course if it was still spring break de santis would probably roll out the red carpet. It’s good enough to allow the head office to be located there, and everyone wants the scads of visitors to shed their money, but…….

      As for the article, I first thought rich folks would be buying high end stuff to store wealth for these uncertain times, but then again, not at the peak of the market. Their safe deposit boxes are most likely already full.

      • char says:

        I’ll bet they end up in Cuba

        • Danno says:

          If they have food they will let them in..a major food crisis about to hit Cuba any days now….

          And according to friends in Cuba, tourists left are being blamed for bringing the virus in….

    • WES says:


      I am still baffled why people are still going on cruises!

      • Phoenix_Ikki says:

        You sir, grossly underestimated the stupidity of the American public :) I remember just 3 weeks ago, LA fox news was interviewing people boarding a cruise ship right when LA was getting ready to issue a shelter in place order. Most of the people interviewed either bragged about getting a great deal on a cruise or said something about staying positive in a tough time. I am sure when you are positive COVID 19 will leave you alone. The whole segment remained me of someone walking in front of a loaded gun and ask what’s the worst that can happen? This is the level of stupidity, head in the sand, ignorant attitude you can expect from general Murica mentality.

        • MD says:

          The cult of permanent positivity..one of the great scourges of our times in the west, propagated and encouraged because ‘happy’ (child-like) people make good consumers and leading adult human beings to remain in a perpetual infantile state rather than develop their rational and critical faculties.

      • Shiloh1 says:

        Good deals to booze it up?

  10. James says:

    BECAUSE THEYVEITHER WEREN’t paying attention or most likely, they had non refundable total payments for the cruises & they thought, “oh it won’t happen to me,” or they just didn’t want to “lose” their money.

  11. Jeff Relf says:

    People are afraid of the unknown.

    Ebola was scary at first. HIV too.
    Later on, we’ll think:
    > What was all the fuss about ?

    Meanwhile, we’re enjoying state-sanctioned
    squatting and overcrowding in:
    > emergency rooms, shelters and jails.

    • Frederick says:

      Ebola is still pretty scary to many Africans I’m sure but I get your point

    • MD says:

      No they’re afraid of the failure of their health care systems due to being overwhelmed, and the consequent carnage to society that could be wrought by this highly infectious virus.

      At least, the ones who are thinking about it are, rather than just buying into infantile conspiracy theories.

      And NO afterwards we WON’T just be thinking “what was all the fuss about?”, as the FACT that 800 people per day are dying in some countries clearly shows to those who are capable of thinking as an adult.

      • Petunia says:

        The healthcare system in America failed a long time ago. Once doctors became dependent on insurance patients, it was over for doctors and patients. Big govt and big business won.

        I know someone who worked for a smallish real estate company in NYC in the 1980’s. The company self insured its employees, maybe 100 people at most. The company fully reimbursed any medical bill an employee submitted. One woman who worked in the office died from AIDs, she was ill over a year. The company paid all her bills, 100s of thousands, and they still considered it cheaper than buying insurance. I know the company is still around because I saw their name on leasing signs in the past year.

        • Petunia says:


          The most expensive house for sale in my town belongs to a dentist. A French king would be envious of this monstrosity.

  12. Ex-YYZ Man in HKG says:

    It wasn’t the relaxation of rules and invigilancy in early March that doomed Hong Kong. It was the mass exodus of Hong Kong residents from other countries, as they were fleeing from massively infected areas (Europe, USA). The re-tightening of rules came after a spike in cases with travel history, followed by a spike in cases without travel history.

    IMHO, the almost universal wearing of masks was what kept the numbers so low, along with some social distancing.

    And for those advocating herd immunity to get it over with fast and not trash the economy because the cure can’t be worse than the disease, I’d like to point out that Hong Kong didn’t do a full lockdown. People are and will continue to be naturally fearful and will cut back on consumption regardless of whether there is a lockdown or not, as evidenced by the February retail print. The only way for this to not drag on for a very long time is to lock everything down for a short while.

  13. Danno says:

    1 question, fellow followers.

    Why are most media outlets only posting the deaths vs the number of survivors?

    I guess i am asking too much for balanced reporting.

    • char says:

      Cause it takes a month or more to say somebody survived. It is also much harder to measure. Even deaths is a measurement that has great errors. A lot of C19 deaths are not counted in my country because they didn’t run a C19 test

    • Wolf Richter says:


      Nonsense. There is plenty of data on those who are deemed recovered after having been to the hospital. But it can take several weeks for the person to recover enough to leave the hospital. The death rates started spiking in just the past week or so. Those people that went to the hospital a week ago are still in the hospital. This is part of the problem with this disease that recovery takes so long, which produces this enormous load on hospitals.

  14. sierra7 says:

    Retail sales of high value goods in Hong Kong?
    What am I missing here?????
    Must be slow day……

  15. Chew on This says:

    Wolf you like to talk about ‘landlords’


    Here’s a good one, in China, when a company goes BK and the owners run-away & accountants fail to answer the phone, the landlord of the property must pay outstanding wages to employees.

Comments are closed.