Food and beverage and lifestyle is driving Hong Kong retail innovation, says property expert Shaun McManus with JLL Hong Kong.
“The activewear and sports apparel sector has been a front-runner in elevating in-store experiences for shoppers,” McManus, who specialises in lifestyle retail and F&B with the property company. “Looking to boost their winter sales, Adidas recently added a virtual reality fitting room in their flagship store in Causeway Bay, giving customers the chance to test new products in a training run simulation that mimics winter weather through a temperature control system,” he wrote in a market review.
Nike’s new 13,000 sqft flagship store on Granville Road in Tsim Sha Tsui offers customised T-shirts and sports bras, as well as a personalised coaching section where customers can test running shoes on a treadmill to see if they are the right fit.
JLL’s foodservice consulting team forecasts that by 2020, 80 per cent of retailers will have some form of additional entertainment element or other unique offerings, like these within their stores.
“The progression of omni-channel retailing – through physical and online stores and mobile apps – is another pattern that looks likely to emerge in 2017. Unlike other markets, eCommerce has yet to gain a strong foothold in Hong Kong.
According to the Hong Kong Trade and Development Council, online sales account for less than 5 per cent of total retail sales among retailers with an omni-channel sales platform within the city.
“To boost sales, retailers are increasingly turning to social media platforms to sell their goods, and will look to take advantage of apps like Instagram and Snapchat to give customers a behind-the-scenes look at their operations with the aim of building brand engagement and legions of loyal followers,” says McManus.
“With over 40 million hits per month on Instagram, Facebook and Snapchat combined; it is no wonder popular brands such as watchmaker Daniel Wellington are attributing the largest proportion of their revenue to their social media marketing campaigns.”
McManus also forecasts that this year promises a further shift away from traditional shopping mall tenant mixes towards an increased focus on entertainment hubs and food courts.
“Many developers are already starting to reposition their portfolios. Swire Properties – whose shopping mall portfolio in Hong Kong includes Pacific Place Mall, CityPlaza and Citygate Outlets – has been at the forefront of this movement. At Pacific Place Mall, for example, it has increased the F&B footprint by more than 20 per cent in the space of 12 months and totally revamped its cinema complex to include a new VIP House with state-of-the-art sound system technology, higher resolution screens and vibrating seats. These changes have all been made with the aim of increasing and retaining footfall to the mall and attracting new customers.
“The use of pop-up stores will also continue to be popular in prime malls, enabling landlords to optimise space and minimise void periods; an important consideration given the current challenges facing the city’s retail sector.”
McManus says that for consumers, revolving pop-up stores freshen the shopping experience and encourage repeat visits.
“All of the above factors point towards a more balanced and increasingly vibrant retail market for Hong Kong in 2017, and suggests that it is far from all doom and gloom for the sector in the year ahead. Rather, we believe these changes are ushering in a healthier retail climate that drives domestic consumption and is less reliant on tourist spend. Hong Kong must, and will, maintain its status as a shopper’s paradise in Asia for the foreseeable future.”
