2018 RETAIL ASIA-PACIFIC TOP 500
OVERVIEW
HONG KONG
Retail sales regain traction Recovering local consumption and returning tourists resulted in growth in Hong Kong’ s retailing market, after two years of decline. Retailing in Hong Kong also witnessed a trend towards further consolidation. Luxury apparel and footwear as well as lifestyle and personal goods retailers sought to find store closures and then revamped their retail formats and channels. International brand retailers sought to expand not only into different retail channels, but also within their core markets. At the same time, both modern and traditional grocery retailers performed consistently, presenting an overall positive performance with relatively small volatilities over the review period. Indeed, retailers in Hong Kong have been adjusting their business strategies, striving to boost sales in such critical times when e-commerce advances and consumers’ minds change quickly.
E-commerce continues to grow On one hand, Hong Kong is one of the most densely populated areas in the world with extensive networks of physical stores; on the other hand, it enjoys high computer literacy and easy access to the Internet. The e-commerce trend continued to progress with the support of various electronic payment methods, myriad delivery options and wide product ranges of increasing online marketplaces. During the review period, store-based retailers moved online and pure Internet players were emerging and developing. Neither blindly poured resources into just expanding marketplaces in the virtual word; instead they actively built omnichannels to deliver convenience to the city’ s busy consumers. They are now trying hard to overcome the challenges of tracking sales, data analytics, inventory management and providing same-day delivery and pick-up services. Many of them do not stay with their original selling channels but pragmatically travel between electronic platforms and bricks-and-mortar stores, taking the respective advantages of both, which leads to channel blurring and strategic agility as well as advancements in diverse e-commerce options.
Pop-up stores for bargaining growth As rent continued to stand high, store-based retailers abandoned the conventional way of expansion by investing in permanent outlets; instead, they increasingly utilised pop-up stores to bargain for growth. They set up temporary outlets in popular malls, famous tourist spots, or any areas without a prior presence to extend the brand and introduce signature products. The bricks-and-mortar retailers were not alone; online brands also joined the trend to maximise exposure, bringing forward the brick-and-click format. In addition to off-price retailing, flash retailing is becoming popular among consumers. The city’ s fresh hunters enjoy festive sale events and ceaseless updates in the variety of shops.
The rise of convenience economy Convenience stores were demonstrating great synergies, unleashing growth potential. 7-Eleven and Circle-K in Hong Kong lined up with international pure online retailers including Taobao, ASOS and Zalora for provision of easy pick-up and return services. The IT infrastructure and logistics management advanced towards the end of the review period. In view of how convenience-savvy consumers are nowadays, convenience stores are responding by modernising and evolving to become more than a place to buy a quick snack and grab some on-the-go beverages. They now venture to become a part of people’ s daily routines. Furthermore, vending companies have also delivered new machines with interactive features and updated technological traits. In the contemporary age, retailers increasingly offer tangible commodities, intangible experiences and convenience.
Economic outlook Even though the recovery of tourism has driven growth in retail sales, it is too early to expect a sharp rebound. Many tourists from mainland China, who have been the pillar of the city’ s retailing industry, no longer consider Hong Kong as their prime destination but prefer other Asian regions such as Korea and Japan, where the latest fashion and gadgets flourish. They also travel to western countries for foreign goods, seeking to satisfy the bourgeois lifestyle ideals in their desires. Furthermore, China’ s economic growth has been slowing and the Yuan renminbi is depreciating against the local currency. The business environment ahead is still full of uncertainties.
While it is unlikely for the tourist sector to restore to its previous momentum, local consumption power is stable. Hong Kong’ s unemployment rate is consistently low and the average income is spontaneously increasing. As retailers have been adapting to the changed preferences of the tourists and aim their strategies on the local market, it is anticipated that many trade players in Hong Kong will still achieve small growth over the forecast period. The government is also attempting to cool the soaring property market with various measures including increasing the stamp duties, expanding public housing provisions, redeveloping decayed urban areas and encouraging co-living communities. Citizens are going to be slightly relieved from having to save up for mortgages and have more disposable income than before. In addition, the retiring Generation X are rich in capital and enjoy abundant time, energy and leisure for shopping.
Nevertheless, online players are expected to realise significantly higher growth than the store-based players even as Internet retailing of the city is yet to show hints of maturity and saturation. Channels such as apparel and footwear, electronics and appliance, health and beauty, and home and garden are likely to perform more weakly than the others with slower growth rates or declines in the long run, because they are less resilient to Internet retailing.
— Ting Huang, Analyst
INDIA
A seamless shopping experience is the leading driver of growth in retailing Retailing registered steady growth in India in 2017. One of the key demands from consumers in 2017 was seamlessness in their shopping experience. From 2015, omni-channel retailing became a common practice among most retailers. The primary reason why omni-channel retailing became popular was consumers’ need to have the convenience to choose the channel, irrespective of the retailer. In 2017, consumers went one step further, whereby seamlessness in the entire shopping experience became important. Consumers did not differentiate in terms of channel any longer, as offline brands and retailers
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