Hong Kong’s retail sector faces turbulence amidst rising closure rates and consumer shifts

Edwin Lee

22nd April 2024 – (Hong Kong) Hong Kong’s retail landscape is witnessing a significant uptick in business closures, a phenomenon that has sparked intense public discourse. The “HK Business Closure News Concern Group” on Facebook has rapidly gained attention, highlighting widespread concern over the downturn among local residents.

Despite various revitalisation initiatives launched by the government, such as the “Nigh Vibes Hong Kong” scheme aimed at boosting economic activities, the effect appears transient. Citizens like Mrs. Cheung lament that despite these efforts, there has been no notable improvement over the months. “Eating out and shopping are still more expensive here compared to the mainland,” she observes, reflecting a common sentiment that challenges the city’s consumer economy.

The situation is particularly dire in districts such as Yuen Long, Tuen Mun, and Fanling, which have been heavily impacted by consumers opting for cheaper alternatives north of the border. Edwin Lee, founder of Bridgeway Prime Shop Fund, notes that while some businesses are losing out, the overall retail ‘cake’ has grown, suggesting that targeted strategies could yield success despite the challenging environment.

The phenomenon of following trends has been cited as a contributing factor to the volatility of the food and beverage sector. Monnie Li, a local celebrity whose family-owned noodle shop recently shut down, expressed concerns over the sustainability of businesses that thrive only during fads. “The entire global economy has taken a hit from the pandemic, affecting all types of businesses here,” she stated.

Analysts have pointed out that the competitive pricing and convenience of online shopping are making physical stores in Hong Kong increasingly vulnerable. The closures are not just a market correction but a shake-up of the retail sector, which had previously thrived in a less competitive landscape. As the Greater Bay Area integration progresses, the economic ‘cake’ is expected to grow, potentially benefiting those who can adapt to the evolving consumer behaviours and market dynamics.