ly high-spending tourists from mainland China – meant that they did not really have to try too hard. Many local shoppers, often living in high rises on top of shopping malls, did not see the point of e-commerce.   It’s fair to say that things have changed dramatically since then. While many retailers elsewhere in the world have felt the impact of the pandemic for one full year, Hong Kong is now entering its third year of retail disruption.  Social unrest that started in 2019 hit retailers hard, particularly as protests centred on key shopping districts such as Causeway Bay and Tsim Sha Tsui. Then came Covid-19. To illustrate how this impacted the Hong Kong retail sector: the overall value of retail sales was 33 per cent lower in 2020 than it was two years earlier.  However, some sectors have fared better than others. The grocery duopoly (Wellcome and ParknShop) has benefitted from restrictions to eating out. After all, Hong Kong is a city where many residents eat out multiple times a day, which has been curtailed by various government measures to contain the pandemic.    The former Longines store in Causeway Bay, Hong Kong The downfall of luxury Luxury retail has suffered the most and is a sector where Hong Kong will likely see the greatest structural changes over the coming years. Some 70 per cent of all luxury purchases are made by non-residents, in particular visitors from the mainland that are there to benefit from Hong Kong’s lack of sales tax.  Visitor numbers from mainland China declined significantly during 2019 amid the protests and plummeted further last year as Hong Kong shut its border to non-residents. Given that sentiment towards Hong Kong has soured somewhat among mainlanders since 2019, it is very likely that the luxury sector has peaked and won’t ever recapture its previous highs.  As a result, luxury brands are currently reducing the size of their footprints in Hong Kong and also increasing their focus on local customers – a demographic that they arguably neglected. This is having a visible impact on shopping areas.  In terms of retail rents, Causeway Bay has lost its crown to Tsim Sha Tsui. Shops vacated by luxury brands in the area are now either empty, or have seen their rents slashed and are occupied by shops selling masks, gadgets and low-priced fashion. Russell Street, once a more expensive retail street than New York’s 5th Avenue, now features a mobile phone accessories shop alongside the Burberry store.  Over the last year, quite a number of international retailers have also thrown the towel in and exited the city, including Gap, J Crew, Victoria’s Secret and Topshop. Admittedly many of these brands were already struggling pre-pandemic.    The light at the end of the tunnel However, it is not all doom and gloom as lower rents present opportunities for mass-market retailers and discounters. Perhaps the most high-profile of these is Japanese discounter Don Don Donki. Don Don Donki entered Hong Kong as recently as 2019 and now trades through six large multi-storey outlets. A key factor behind its success is that its wide offer of Japan-inspired products and foods are hugely popular with local residents. Even during the pandemic its new store openings required barriers to keep the crowds in check.  Landlords have also become more open to having pop-ups in vacant shops to ensure a steady level of footfall and to attract new tenants. Small brands that were previously restricted to trading through small micro shops tucked away on the upper floors of commercial buildings are now finding it possible to occupy more prime real estate on a temporary basis.  All of these developments point to the future of retail in Hong Kong. It might be more mass market and ‘local’ than its previous incarnation, but it is also potentially more vibrant and reflective of the city. And yes, Hongkongers have also finally gotten round to getting into e-commerce, thanks to the pandemic.