Here’s how Hong Kong’s retail market performed in January

Pastry and cookie retailers had notable success.

The Hong Kong retail market continues to show weakness according to a Knight Frank report, with total retail sales dropping by 7.3% in 2024 compared to the previous year. The provisional retail sales amounted to HK$32.8 billion in December 2024, concluding with a 9.7% YoY decline.

“The unfavourable macroeconomic environment in 2024, the surge in northbound travel of locals, coinciding with decline in spendings by tourists were different drivers behind this disappointing sales drop, representing a setback from the improvements seen in 2023 following the reopening of borders,” the report added.

Here’s more from Knight Frank:

Among the various types of retail outlet, the substantial declines in consumer durable goods and jewellery watches, and clocks, and valuable gifts categories highlight the adverse impact on consumer appetite amid challenging economic conditions.

Furthermore, the value index of restaurant receipts for all restaurants registered a 0.1% YoY decline for the entirety of 2024. This diminishing trend in dining can be substantiated by the rising restaurant receipts from fast food establishments, which saw a 7.2% YoY increase, contrasting with a 4.3% YoY decrease from Chinese restaurants.

Despite a 14.1% YoY drop in retail sales of bread, pastry, confectionery, and biscuits in 2024, certain pastry and cookie retailers have successfully navigated the challenges. For instance, Japanese bakery, Truffle BAKERY, has leased ground floor space at The Hedon in Causeway Bay, while Singaporean ice cream brand, The Ice Cream Cookie & Co., has inaugurated its first shop in Hong Kong on Gough Street, Central.

Moreover, the Wan Chai-based bakery, Bakehouse, has expressed interest in expanding its presence to additional areas in the New Territories by 2025. These brands have effectively capitalised on the changing consumer habits among locals and tourists by offering distinctive products, leveraging social media, and promoting immediate enjoyment for consumers.

With the opening of the Kai Tak Sports Park and related mega sports and entertainment events to boost both local and tourist consumption – the government estimates the project to attract over 840,000 visitors and bring over HK$3.3 billion spending in Hong Kong – the value of total retail sales is expected to stabilise in 2025.

However, the market will require more immediate and effective strategies to surpass 2023 sales figures or return to pre-COVID levels. Other sectors are encouraged to adopt the success strategies of these resilient pastry and cookie retailers, especially small and medium-sized enterprises (SMEs). Although the retail and macroeconomic landscape has not fully recovered, opportunities remain for SMEs to make their market and stimulate market growth.