Here's why 2022 is going to be a ‘slightly’ worse year for retail in HK

Retail sales growth is expected to be lower in 2022 at 7%.

The year 2022 will be “slightly worse” for the retail industry as Hong Kong’s economy remains to be clouded with uncertainties, experts from PwC said.

The firm said the retail industry will be affected by wealth impact on consumption, employee’s disposal income and reopening of borders, among others.

PwC’s Michael Cheng said retail sales may jump by 7% by yearend if borders reopen between Mainland China and HK for three to four months between the third and fourth quarter.

The growth will also probably be driven by the internal sports events to be held this year, including Beijing’s Winter Olympic Games in February and the FIFA World Cup Qatar 2022 in November and December.

“We expect that the consumption of sports goods and clothing will increase. Jewellery and luxury sector will also continue to revive, on the back of pent-up demand for jewellery and gold products for weddings when the pandemic situation eases, as well as the need for inflation hedge and wealth preservation.” Cheng said.

The expected growth for 2022 however is lower than the recorded increase in 2021 of 8.1%.

With borders still closed due to the outbreak of the Omicron variant in the city, HK’s retail sales for the year will be primarily driven by local consumers, Cheng said.

Cheng advised local retailers to diversify “their customer profiles and expand their footprints in the Guangdong-Hong Kong-Macao Greater Bay Area, which represents an immense market of more than 86 million population.”

“Embracing digital technologies and innovation would be a sensible strategy for retail businesses trying to remain competitive, accelerate their pace in O2O integration to serve existing and new customers outside Hong Kong, take advantage of rapidly growing opportunities in the Greater Bay Area,” Cheng added.