Hong Kong is called many things – a financial hub, food paradise, and shopping heaven. However, the COVID-19 pandemic has hit Hong Kong’s economy hard, most notably its retail industry.
Although total sales rebounded, 2021’s retail sales were still 27.2% lower compared to data from 2018, according to the Census and Statistics Department.
The government will be launching a second round of the consumer voucher scheme as a stimulus and is considering implementing a rental moratorium as a means to remedy the downfall in retail sales.
What happened to the shopping districts?
With fewer local shoppers and mainland tourists, shopping districts are attracting fewer customers than ever.
The hustle and bustle of Causeway Bay have been replaced by an eerie silence with customers nowhere to be seen. Food stalls that would have lengthy half-hour queues in the pre-pandemic times are struggling to keep their business going, and shopping malls, once overflowing with frequent shoppers, have been offering more discounts to customers in order to pay their rent.
“I have never seen Causeway Bay like that,” said Katrina Choi, a 22-year-old Causeway Bay resident.
“Obviously, most of the shops here are closed.” Choi explained, “Before the pandemic, there were lots of people here even after 11 or 12 pm. Now, even though it’s just 9 pm, the lights are out as if it is late at night.”
On top of social distancing measures, such as dine-in bans, the city is recording over 10,000 confirmed cases daily, which has caused a negative sentiment to arise regarding shopping in physical stores.
“I rarely go out too because my parents and I are worried about getting infected, and unfortunately, one of my friends got infected as well,” Choi added.
SOGO, one of the largest shopping malls in Causeway Bay, plunged 36.2% in sales in 2020, as stated in the annual report from Lifestyle International Holdings Limited, the owner of SOGO Hong Kong. 38.7% fewer customers went to this enormous Japanese department store.
The downfall of Hong Kong’s retail
Hong Kong’s retail industry is facing one of its biggest obstacles ever from the pandemic.
Historically, Chinese New Year has been the time when retail sales peak. However, the fifth wave of COVID that hit Hong Kong before the New Year Celebrations gave retailers in Hong Kong no choice but to “miss out” this golden opportunity, according to the Hong Kong Retail Management Association.
Hong Kong’s adoption of a dynamic zero-covid policy meant isolating itself from other countries and even the mainland, ultimately hampering the number of incoming tourists and revenue. The total number of visitors dropped dramatically by 97.4% from 2020 to 2021, according to the Hong Kong Tourism Board. The tourism industry, one of the four key industries in Hong Kong, contributed 3.6% to total GDP in 2019 but dropped to 0.4% in 2020 as stated in the government’s statistics.
“The latest wave of the local epidemic and the tightened anti-epidemic measures have weighed on consumer sentiment and posed renewed pressures on the retail sector,” said a government spokesman.
Despite the unprecedented challenges faced by retailers, the Hong Kong government only subsidised retailers in the first round of an Anti-epidemic Fund in 2020 out of a total of five rounds.
Consumer voucher scheme and rent moratorium
In order to stimulate markets, the government is going to launch its second round of electronic consumption voucher schemes with a total value of $10,000 for each eligible Hong Kong resident and new immigrant.
To reduce the financial burden from rent, the government is going to implement a Rental Enforcement Moratorium. The moratorium will prohibit landlords from terminating the tenancy of or taking legal actions against tenants for failing to settle rents on schedule, according to the 2022-2023 Budget.
“This is a mechanism that we intend to put out in such a way that the landlord and tenant can sit together and see how they can work this out together.” Christopher Hui, the Secretary for Financial Services & the Treasury explained at a press conference.
(Cover Photo: Anne Chan)