
Hong Kong Retailers Facing Crisis as Consumer Trends Shift
2025-07-03
Author: Sarah
The Retail Crisis Unfolds in Hong Kong
HONG KONG — Hong Kong's retail scene is in turmoil as changing consumer preferences and a decline in tourism take a toll, leading to a surge in store closures across the city.
This week, a renowned 36-year-old seafood restaurant and a popular upscale food court in Causeway Bay were among those forced to shut their doors.
Long-standing businesses like cinema chains and a beloved bakery with a 41-year history have also succumbed to the pressures of the market.
Influences Driving Change
Industry analysts reveal that sagging domestic spending paired with the allure of cheaper prices just over the border in Shenzhen are wreaking havoc on retail operations.
As if that weren't enough, China's economic downturn, rising geopolitical tensions with the US, and a stringent national security crackdown have further dampened business confidence in Hong Kong’s small, open economy. The city’s GDP is projected to grow a modest 2% to 3% this year, a stark contrast to previous years.
Annie Yau Tse, chairwoman of Hong Kong's Retail Management Association, emphasized, "The change in consumption patterns is irreversible." Once a shopping paradise for affluent mainland visitors, Hong Kong has seen its charm diminish due to mass anti-government protests in 2019 and stringent COVID restrictions.
Tourism: A Double-Edged Sword
In an effort to revive tourism, local authorities have rolled out initiatives including hosting major events like Coldplay concerts and a Manchester United exhibition match at a brand-new harborside stadium.
While visitor numbers are rebounding, with May 2023 seeing a 20% increase compared to the previous year, overall spending remains tepid. Retail sales have only recently ticked up by 2.4% to HK$31.3 billion (US$4 billion) in May, a far cry from the HK$40.5 billion recorded in May 2018.
A Structural Shift in the Market
Jack Tong, director of Savills Research & Consultancy, suggests that this wave of closures signals a fundamental shift in Hong Kong's retail landscape starting from 2023.
With prime street rents plummeting to levels not seen since 2003, many businesses are struggling to adapt. Even established retail giants like Cafe de Coral reported a staggering 29.6% drop in net profit for the fiscal year ending March 2024.
Flickers of Hope Amidst the Turmoil
Despite the bleak outlook, some signs of recovery are beginning to emerge. At a recent jewellery fair, attendees noted an uptick in the presence of Chinese dealers, who were expressing interest in the market again, albeit cautiously. Vipul Sutariya remarked, "That’s a good sign, signaling potential for revitalization.
As Hong Kong grapples with these challenges, the road ahead remains uncertain, but the city's indomitable spirit continues to shine, hinting at resilience amid the turmoil.