Meet Jessica Yau, a typical 36-year-old Hong Konger. She, like many of us, loves to shop. Whether it’s a present for her family or herself, Jessica always begins with researching the latest products and their prices on her phone, which is, of course, close at hand. But that’s where her mobile shopping ends. When it comes to buying the item, Jessica will visit her nearest Zara or Apple store. “The internet’s good at showing you what’s new and on trend, but I prefer and feel more confident in shopping in an actual store. Plus, isn’t visiting a mall the 21st century past-time?” says Jessica.
Jessica is not the only person who prefers running the gauntlet that is Hong Kong’s busy Mong Kok shopping district on a Saturday to touch and feel a product. A survey conducted by VISA in 2015 reported that, although online purchases in Hong Kong have increased by 23% since 2014, many consumers still prefer to head to their local mall. This is a little different than their Asia Pacific neighbors. 95% of people in Hong Kong have a mobile phone, but despite that, they are the most likely group to search online while buying offline.
Behind the In-Store Preference
How did that happen? Why do so many digitally savvy consumers prefer the bustle of traditional brick-and-mortar stores instead of shopping on a phone in their local Starbucks?
There are three reasons, and while these are specific to Hong Kong, anyone who shops in a bustling metropolis will see a resemblance to their own experience.
Reason 1: Offline shopping in Hong Kong is super convenient. Shops in Hong Kong are everywhere. Most are open all hours and we’ve knocked on the head any notion of closing early on Sundays—thank goodness (not sure where I’d be if I couldn’t visit my local Cartier at 8pm on a Sunday night.)
Reason 2: eCommerce sites are often perceived by, the otherwise highly trusting Hong Kong population, as untrustworthy platforms (we were the people who invented pay-on-delivery eCommerce, a brilliant idea). This is mainly because consumers are anxious about receiving faulty goods after making costly transactions on their phones. However, the ever innovative eCommerce guys have found a solution; same-day delivery. You can shop online and only have four or five anxious hours to wait before you’re fully reassured as a gold box with beautiful brown ribbon arrives at your café table.
Reason 3: It’s all about the personal shopping experience. From the black-books held by the ladies behind the make-up counters to guy in the Wan Chai Computer Centre who always gives the best ‘deal’ – we like to talk, to negotiate, to transact with real people.
With a general uneasiness about online shopping, it’s no wonder that it only represents a measly 5% of the total retail market in Hong Kong. (This differs in mainland China, where online sales skyrocketed to 3.877 trillion yuan—HK$4.5 trillion—in 2015, making it the biggest eCommerce market globally!)
Optimism about eCommerce in Hong Kong
Nevertheless, analysts of eCommerce in Hong Kong remain optimistic about its future. It’s mainly due to the huge growth in mobile apps, which has made shopping for anything possible wherever and whenever you like.
One great example is foodpanda.com. By delivering 30,000 food options within 30 minutes in Hong Kong every day, the app has single-handedly managed to slash the lunchtime pavement congestion in Central by 20%. It’s a simple and sound system that’s user friendly, offers a superb experience, and satisfies Hong Kong’s biggest passion – food.
Consumer retail options in Hong Kong are actually more limited than you would, at first glance, think. Retail space is hideously expensive – retailers lack footage, frontage and footfall. Every mall carries the same 100 brands; most restaurants belong to one of three ‘big food groups’. But digitally-enabled shoppers now have more choices than shopping streets have the square-foot space to offer. This is true in every major global city.
The Online Store of the Future
The next phase of personalised recommendations (based on your Facebook profile), individual shopping experiences (based on your online search history) and specifically tailored content (based on your subscription / blog data) will surely tip the balance in favor of eCommerce.
The power of digital gives as it receives. Never in history have such a large number of people shared their opinions about a brand to absolute strangers so consistently. It’s undeniably true that a 2-star rating of a local restaurant by a couple from Taiwan influences you more than any billboard image which shows celebrities pretending to have fun with their noodles (which, according to the couple from Taiwan, were not that tasty).
Mobile technology has given consumers increased power over their shopping journey. Picture this: the store is in an expensive, air-conditioned mall, where the helpful shop assistant immediately finds your shoe size. Whilst you try them on, you snap a picture to your Facebook wall asking your friends if you should buy them. Seven seconds later comes a resounding Whatsapp message of ‘yes’. However, instead of heading to the cashier, you thank the assistant and leave the store, before quickly tapping away on your phone to find the same product at a cheaper price online. This is happening every day.
The Retailers Fight Back
The customer now has more options than ever, but done correctly the retailer has new-found power also. I’ve cooperated with many brands who’ve worked brilliantly with customers to capture their data and preferences which helped inform their staff of their customers’ purchase preferences as they walked in to the store. It’s the digitally enabled human version of search intent data, and consumers like it because the brand has proposed a reasonable value exchange—give us your data, and we’ll give you an improved experience).
Toward an Omnichannel World
Like it or not, the digital revolution is here to stay. To remain competitive within the upcoming years, retailers need to start adopting an omnichannel approach to their customers. Consumers don’t see the difference between a brand online and a brand on the street, to them it’s one brand; only retailers think in channels.
Digital is empowering consumers to make informed decisions throughout the entire purchase experience, enabling Jessica to have more choices with more convenience than ever before. Digital also enables retailers to have an ever-more detailed view of their customer. Done right, this should enable them to offer ever more personalised experiences (on and off-line) which increases transaction volume and spend. Digital will continue to become an ever more integral part of all our lives. The challenge is to embrace it.
Thanks to Tiffany Tivasuradej for her support in writing this article.