Riding out Hong Kong’s retail downturnOctober 25, 2016 / By
Against a challenging retail environment, mall operators have had to review business strategies to maximise rental income. To this end, operators have adopted a variety of approaches to increase footfalls and sales. Among the most common strategies currently being utilised in the market, include:
- Diversifying offerings: The collapse in luxury goods sales has propelled mall operators to diversify their tenant mix more towards lifestyle, sportswear and F&B offerings.
- Cityplaza in Quarry Bay brought in Eslite Spectrum, a lifestyle bookstore that offers reading, art, cultural and dining experiences to capture a wider range of shoppers;
- Olympian City in Tai Kok Tsui made room for a new MUJI store centred around a philosophy of versatile lifestyle products;
- Harbour City in Tsimshatsui opened an Adidas Sportswear Collective Store that carries a wider variety of the brands crossover collaborations; and
- Pacific Place Mall in Admiralty increasing its F&B offerings by about 50%.
- Introducing new brands: Landlords are increasingly turning to new brands to freshen their offerings as a means to stand out from the crowd. Yet, they remain selective, being more receptive to brands with established reputations overseas. Harbour City, for example, has helped a number of new brands debut in the local market with retailers including Youk Shim Won from South Korea, Rouge Vif La cLe by Abahouse from Japan and Ed Hardy from the U.S. all opening their first stores in the city in the mall.
- Leveraging on pop-ups: Incorporating pop-up stores is becoming a popular strategy for mall operators to generate excitement among shoppers and draw higher footfalls. Nutella’s recent pop-up store in Pacific Place Mall successfully created a buzz in the city, drawing hour-long queues of people to buy personalised jars of the famous spread. The flexible nature of pop-up store leases also allows landlords a quick assessment of the retailing potential of prospective tenants before offering more permanent stores within their malls. Hachill, a local eyewear brand, was able to parlay a pop-up store at Hysan Place in Causeway Bay into a permanent store within the mall after it was able to demonstrate its potential to the mall’s owner.
- Focusing on youths: With housing prices moving beyond the reach of most of the city’s young urban professionals, the incentive to save for a downpayment on a home purchase has decreased. Sensing the increased spending potential of this cohort, mall operators have sought to adjust their tenant mix to better cater towards the younger generation. At Times Square in Causeway Bay, the operator has introduced a number of vibrant F&B operators into the mall including Denmark’s Joe & The Juice, a brand that targets younger customers and Selfie Café, a new concept making use of food printing technology. Over at Harbour City, the operator has beefed up its young fashion offerings by adding Market Liberty, a South Korean collective store renowned among the youngsters.
Recent visits to some of these malls would suggest that these strategies appear to be working. In most malls, footfalls seem to be on the up. Whether these moves will be enough for operators to ride out the current downturn, however, remains to be seen.
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