Boston, MA -- (SBWIRE) -- 02/18/2014 -- Hong Kong's retail sector is expected to grow steadily over the next few years as its sophisticated urban population continues to spend on non-essential items such as luxury clothing and jewellery. This will result in a strong rise in household spending across all retail subsectors. We are particularly bullish about the future growth prospects for personal care and insurance spending, which we expect to continue to constitute the highest proportion of overall household expenditure throughout our forecast period. We also forecast food and non-alcoholic drinks, housing and utilities and clothing and footwear spending to remain high through to 2018.
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The new Hong Kong retail report provides an extensive and comprehensive forecast of various retail indicators including household spending and headline total spending across each retail subsector; household income and employment forecasts; demographic forecasts. I includes a detailed breakdown of household and per capita spending across a large number of retail areas including food and drink; healthcare and insurance; consumer electronics; toys; pets; gardens; household goods; and a number of other subsectors.
Hong Kong's street markets may be a magnet for tourists, but the concept of modern retail is firmly established in the territory, with organised sales accounting for the lion's share of the total. High-end shopping malls and department stores dominate. Overall, we see long-term potential in the local consumer market, particularly for non-essential items and aspirational purchasing by a sophisticated consumer base. We forecast the average net household income will be around US$58,191 in 2014, with a fairly even split between the number of households in the US$5,000+ wage bracket and the US$10,000+ wage bracket.
However, a significant percentage (31.2%) of households falls into the highest US$50,000+ wage bracket, and this is forecast to rise to 37.6% by 2018. This represents the key demographic for increased household spending on luxury items beyond necessities such as food, utilities and transport, and will result in a corresponding increase in household spending on personal care and insurance, recreation, and culture and health.
However, we note downside risks to our forecasts in the form of difficulties in the banking sector, which is facing growing risks not just from a general slowdown in the domestic economy but also from a growing exposure to borrowers in China. There is also an increasing possibility of an earlier-than-expected property correction.
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