Double threat: Negative outlook for food retail scene as Hong Kong battles coronavirus and protests

25-Feb-2020 - Last updated on 25-Feb-2020 at 01:40 GMT

The ongoing eight-month long protests have negatively impacted almost all retail sectors in the country, with the exception of supermarkets and fuel ©Getty Images

Hong Kong’s sales of food retail outlets have dropped 3% to HK$42.8 billion (US$5.5bn) in 2019, compared to HK$44.3 billion (US%5.7bn) in 2018.

These figures were released by the Hong Kong Census and Statistics Department (C&SD) from the Monthly Survey of Retail Sales (MRS).

The downward trend was seen in all subgroups of food retail outlets which includes fish, livestock, poultry, fruits, vegetables, bread, confectionery, and alcoholic drinks.

The types of retail outlets included in the MRS include food, supermarket and convenience stores (commodities), fuel, clothing, department stores, luxury goods and consumer goods (furniture, electrical goods, medicine, cosmetics etc).

The ongoing eight-month long protests have negatively impacted almost all retail sectors in the country, with the exception of supermarkets and fuel.

Commodities in supermarkets fared slightly better, with an increase from HK$52.9 billion (US$6.8bn) in 2018 to HK$53.3 billion in 2019, a 0.7% increase.

Professor Terence Chong from The Chinese University of Hong Kong told FoodNavigator-Asia: “Supermarket and fast food restaurants sales actually increase during the turmoil. Tobacco and alcohol are luxury items which will usually drop in sales during market downturn.”

Outlook

For 2019 as a whole, the value of total retail sales was estimated at HK$431.2 billion (US$55bn), a 11% decrease compared to 2018 (HK$485.2 billion).

A government spokesman said that retail sales continued to decline sharply in December 2019, as the impact of the local social incidents on consumption- and tourism-related activities remained severe.

For the fourth quarter of 2019, the volume of retail sales fell by 24.1% year-on-year, representing the largest quarterly decline on record.

The spokesman further pointed out that the business environment for retail trade has become even more difficult recently, with the threat of the novel coronavirus infection heavily weighing on inbound tourism and local consumption sentiment.

“The near-term outlook for retail sales depends critically on how the situation of the novel coronavirus infection will evolve. The Government will monitor the situation closely,” he added.

The recent Lunar New Year festival usually sees retail sales peak, but it is too soon to know how sales performed this year.

However, Professor Chong believes there might be hope in the horizon. He told us: “General retail drop will narrow down after the Chinese New year as the social movement is coming to an end.”

Annie Yau Tse, the chairman of Hong Kong Retail Management Association (HKRMA) said the association continues to hold a pessimistic view towards the outlook of the retail market of Hong Kong in the near term.

The association forecasts a year-on-year double-digit decline ranging from -10% to -20% in the first half of 2020.

The MRS data was based on retail sales collected via a questionnaire from 3,000 local retail establishments (physical shops, online channels).