Deloitte: Expects Hong Kong retail sales to grow nearly 8% in 2026, reaching HKD 410 billion

Deloitte China released a review of the Hong Kong retail market for 2025 and an outlook for 2026, indicating that retail sales in Hong Kong are expected to rise by nearly 8% this year, benefiting from the gradual recovery of the Chinese economy, including measures such as the central government's stimulus for consumption, stabilization of the real estate market, and "anti-involution" policies. Although geopolitical risks remain, the stabilization of the real estate market and the wealth effect brought about by a thriving stock market, along with the strengthening of the Renminbi leading to an increase in visitors to Hong Kong, make the market outlook more optimistic. The report suggests that improving tax efficiency and effectively utilizing artificial intelligence to optimize costs will be important directions for retail enterprises to enhance efficiency, improve profit margins, and respond to rapidly changing markets.

Zheng Huanran, partner and head of Deloitte China's Hong Kong consumer market business, stated that the Hong Kong retail industry will face multiple challenges in the first half of 2025 due to macro factors such as slowing economic growth, high interest rates, and global trade tensions. As tariff impacts diminish and interest rates gradually decline, coupled with stimulus measures from the mainland, a continued rebound in the stock market, gradual recovery of tourist spending, and an increase in visitor numbers from both the mainland and international markets, local retail sales are expected to show signs of stabilization in the second half of the year, supporting the retail industry in regaining momentum in 2026. Retail enterprises will also need to adjust their strategies to capture local and tourist demand.

Zheng Huanran added that the Hong Kong consumer market saw a strong recovery in the second half of last year, and it is expected that the local retail industry will maintain momentum in 2026, with annual retail sales expected to grow by nearly 8% to approximately HKD 410 billion. Benefiting from the strengthening of the Renminbi, an increase in inbound tourists, stabilization of the real estate market, and the wealth effect brought about by interest rate cuts driving the stock market up and an active new stock market, consumer confidence is expected to further rebound. Major retail categories are anticipated to drive growth, with jewelry, watches, and luxury gifts expected to rise by 19%, clothing and footwear by 16%, pharmaceuticals and cosmetics by 11%, and department stores by 10%. Given that macroeconomic impacts generally lag the stock market by about six months, the performance in the second half of the year is expected to be better than in the first half, similar to the situation in 2025