The Sogo department store in Hong Kong’s Tsim Sha Tsui district is set to close in March after 18 years, making it the latest prominent retail outlet to cease operations amid a retail slump that began in 2019. The store is holding a “closing super sale” event in the first three weeks of January. A widely circulated brochure and a post on the Japanese-style luxury department store’s app announced discounts of as much as 50 per cent on a wide array of items in the beauty, fashion, bedding, health and food categories. “Sogo Tsim Sha Tsui Store will close down its business on March 12 due to the expiry of the lease on the shop space,” Lifestyle International Holdings , which owns and operates the store, said in a statement. The outlet, which opened in 2005, is generally less crowded than the flagship Sogo store in Causeway Bay , but it has been seen as a mainstay of the Tsim Sha Tsui district, which entices tourists with sights such as The Peninsula Hong Kong, the K11 Art Mall, museums and cultural venues. Lifestyle is set to open another flagship store by the end of the year in the Kai Tak area. “Although the border between mainland China and Hong Kong has recently been reopened to a limited extent, mainland Chinese tourists are expected to make limited contributions to a recovery in the city’s retail sector in the short term,” Lifestyle said. The company added that increasing passenger and cargo traffic bode well for the local retail market, and it remains cautiously optimistic about the local retail sector. Lifestyle, which delisted from the Hong Kong exchange in December , has budgeted HK$14 billion (US$1.8 billion) for the Kai Tak development. The project “will host a new Sogo department store along with complementary retailing, entertainment, dining and lifestyle-servicing facilities”, according to the company website. Lifestyle reported a record loss of HK$1.3 billion for 2021, the company’s first loss since it started reporting its financial performance in 2004 when it listed. Its total sales rose 9.9 per cent to HK$6.2 billion, while revenue jumped 14.9 per cent to HK$2.3 billion. Income from other investments, however, dragged down the retailer’s profit. Hong Kong’s retail sector likely lost more than HK$132 billion since 2019 when anti-government protests broke out in the city, followed by the coronavirus pandemic. Hong Kong retail sales fall 4.2 per cent in November, but uptick predicted Many high-end and luxury brands, including US-based lingerie brand Victoria’s Secret, have either reduced their footprint or ceased operations in the city. Tsim Sha Tsui was recently dethroned as the world’s most expensive shopping district , falling behind New York’s 5th Avenue. Hong Kong’s major shopping malls have announced more than HK$18 million in spending rewards to lure mainland Chinese travellers as the border between the city and the mainland reopens. In November, retail sales in Hong Kong totalled HK$29.5 billion, down 4.2 per cent from October, according to official data. The figure marked the largest monthly drop in retail sales performance since March, when retail sales fell 13.8 per cent. Can Hong Kong reclaim luxury retail market crown? “I expect Hong Kong could experience a considerably more rapid pickup,” said Oliver Tong, head of retail at JLL in Hong Kong. “Meanwhile, the abandonment of travel restrictions in late December sets a positive outlook to the market, while the rise in tourist spending is anticipated to stimulate market confidence.” Local retail sales are expected to increase by about 10 per cent in 2023. Rents of prime shopping centres and high-street shops are likely to rise by as much as 5 per cent and 10 per cent, respectively, Tong said. The return of tourists from mainland China should benefit luxury brands and shopping centres, said Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong. “Hong Kong is a very attractive destination due to the close proximity to the mainland, and luxury goods in Hong Kong have better prices, thanks to the lack of import duties,” she said.