Pedestrians walk across a road in front of a mask store in the Causeway Bay area of Hong Kong, China, on Jan 24, 2021. (PHOTO / CHINA DAILY)

HONG KONG - Hong Kong retail saw the worst annual sales decline on record in 2020 as it continued to reel from the coronavirus-linked slump.

Shopping malls and retail stores have been forced to rely on local patrons which has dealt a heavy blow to luxury goods with sales of jewelry, watches, and other high-value gifts plummeting by more than 40% 

Sales for the period nosedived by 24.3 percent to HK$326.5 billion (US$42.1 billion) compared with 2019 due to the pandemic-induced economic uncertainty and the frozen inbound tourism, according to the Census and Statistics Department figures released on Tuesday.

Sales for December 2020 fell 13.2 percent from the same period in 2019 while those for November 2020 slipped 4.1 percent compared with a year earlier, the lowest drop since June 2019. However, sales for the fourth quarter of 2020 climbed 3.2 percent compared with the preceding quarter, according to the Census and Statistics Department.

The retail environment is expected to remain challenging in the near term amid the fourth wave of COVID-19 infections and the tourism halt, a spokesman for the Hong Kong Special Administrative Region government said.

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Hong Kong has been battling a fourth wave of coronavirus infections since September, which led to tighter social-distancing measures being imposed upon restaurants, bars, and beauty salons, the latter of which have been closed for more than two months.

Travel restrictions aiming to curb the transmission of imported coronavirus cases have brought inbound tourism to a de facto halt with only 3.57 million people visiting Hong Kong in 2020, the least in 36 years. Shopping malls and retail stores have been forced to rely on local patrons which has dealt a heavy blow to luxury goods with sales of jewelry, watches, and other high-value gifts plummeting by more than 40 percent.

The Hong Kong Retail Management Association said on Tuesday that it remains pessimistic about retail sales for the first half of 2021. “Due to the (pandemic-induced) uncertainties and the low base of 2020, we think the performance in (the) retail sector in the first half of 2021 will be stable,” a spokeswoman said.

With the Lunar New Year only a week away, the HKRMA is “not optimistic” about the retail performance during the festival season, citing ongoing social distancing restrictions. “However, we foresee the traffic will not be too bad as we could tell from the past that even if there’re restrictions, people will still go out,” she said, “The shopping will pretty much focus on household items instead of luxury ones.”

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PwC forecasts a surge in shop traffic during the Lunar New Year which will translate into a sales spike in the first half of February and a relatively muted second half. “The spending will mainly cluster around luxury products such as prestige items and watches as means of wealth preservation; and on the other end of the spectrum, clothing, consumer electronics, and basic necessities including masks, paper towels, and sanitization products,” said Michael Cheng, Chinese mainland and Hong Kong consumer markets leader at PwC Asia-Pacific.