Online purchase

How can brick-and-mortar retailers in Hong Kong compete with the convenience of shopping online?

The impact of the pandemic on behavioral changes is undeniable, especially when it comes to online shopping habits. However, with the slow opening of markets and declining numbers of new COVID-19 cases in cities like Hong Kong, consumers are becoming more comfortable venturing out and buying products again in physical stores. According to the latest figure from the Census and Statistics Department, the value of total retail sales in May 2021, provisionally estimated at HK$29.6 billion, increased by 10.5% compared to the same month in 2020. Of the total retail sales value in May 2021, online sales accounted for 7.4%. The value of online retail sales during this month, provisionally estimated at HK$2.2 billion, increased by 53.1% compared to the same month in 2020.

While online sales and purchases aren’t going away anytime soon, it looks like offline channels are coming back to life and still essential for businesses. In a conversation with MARKETING-INTERACTIVE, Xen Chia, strategic marketing director of XGATE, a company specializing in digital marketing, said that companies must know how to respond to changing customer needs if they are to succeed.

Retail marketers looking to take advantage of this ever-changing buying trend need to transform their retail sales in several areas.

For example, they must be quick to launch e-commerce channels using a headless commerce architecture which is the separation of the front-end and back-end of an e-commerce application. According to Salesforce, this architecture gives brands the freedom to build what they want and how they want. More importantly, it enables brands to enrich the customer experience.

At the same time, improving the customer experience with omnichannel retail and creating a unique customer journey with personalization are also key, Chia explained.

Chia added that there are many opportunities in Hong Kong’s online and offline retail market, with young and older consumers very rapidly adopting new technologies for education, work, ordering meals in online, shopping for basic necessities and, most notably, now applying for the Hong Kong government’s voucher program. .

How mega-retailers are helping small retail SMEs

Many Hong Kong retail players also fall under the SME segment in the country. To provide a more convenient shopping experience for customers, many of these retail SMEs have also adopted payment service providers participating in the Hong Kong government’s voucher program. To do this, they have partnered with notable companies with established payment platforms.

Octopus, for example, has a large number of business partners in its network, which are also SMEs. To benefit small merchants, the company announced in April that new eligible merchants could enroll directly with Octopus Card to make transactions easier for consumers. Octopus also waived setup fees or rental fees for merchants. Those who signed up for the Octopus app for business received a free Octopus Mobile point of sale and waived bank account funds transfer fees until the end of the voucher program. HKT, operator of Tap & Go, also provided merchants with Tap & Go QR code transaction and setup fee waiver.

At the same time, AlipayHK launched the “merchant code” for SMEs. With the merchant code sticker, businesses can just paste the code in the store, and they don’t need to pay the setup fee and free up extra space for the machine. While WeChat Pay has rolled out a number of promotions to return the money earned from the voucher system to users and merchants. As of July 18, more than 6.1 million Hong Kong residents had joined the voucher scheme.

Bringing back the appeal of physical commerce

The rapid growth of e-commerce has prompted brands and marketers to bolster their digital offerings. But does this change in behavior put offline merchants in a precarious situation?

Freda Ng, chief digital officer of Watsons International and Hong Kong, said while e-commerce is crucial to a brand’s success, the offline landscape should not be ignored. Since the pandemic in Hong Kong is showing signs of improvement, customers are returning to physical storefronts and brands need to combine the strength of their offline and online offerings for a holistic journey.

Ng explained that the offline plus online (O+O) strategy is the new normal for retail. “O+O is more about creating a seamless integration of offline and online shopping experience, and that can be further enhanced if powered by big data and AI,” she said. declared.

Ng added that beyond rolling out online content to emotionally engage customers on social media, the company has also bolstered its on-site offerings to welcome them back.

In a survey conducted by Watsons across more than 20 markets, more than 22,000 respondents said they would return to physical stores to shop and Hong Kongers were no different, while a third of respondents said said they would even shop more often. in shops.

Ng said such responses underscore people’s desire for a human connection that cannot be replaced by technology and digital, and this trend is even more prevalent in health and beauty. “Customers want to touch and feel the texture of skincare products and the true color of cosmetics, while getting face-to-face advice from health experts, so offline remains an important part of the experience. buying,” she said. .

Ng added that customers also have higher expectations now when entering a store “They expect the in-store experience to be fun, engaging and sensual. They want both a human connection and a fun in-store experience, and these need to be strongly connected to their digital and social platforms. »

O+O is the future

To appeal to its customers, Watsons now offers a number of O+O retail technologies in its stores in Hong Kong. For example, “WatsonsGO” allows customers to checkout and pay through its mobile app so customers don’t need to queue at checkout. Meanwhile, ‘ColourMe’ is an enhanced virtual makeup service that launched on Watsons apps, takes advantage of augmented reality and even if customers are wearing a mask, they can try on virtually any lipstick . Additionally, Watsons introduced a virtual hair color tool in the mobile app to help customers choose the right hair colors.

When it comes to building a lasting relationship with customers, Ng said a network of digitally connected physical stores makes it easier for customers to shop, while constantly innovating new sensations in the experience. of purchase, and a team of professionals in store are the secrets of maintaining a lasting relationship with customers.

Accepting Ng’s comment, Chia said, “Consumers are social creatures. We like to interact with others. Therefore, the offline experience will still be important for retailers as the economy slowly opens up. »

He added that the consumer shopping experience will continue to evolve and marketers must adapt to new expectations by delighting customers with a better personalized experience and dedicated customer services to build loyalty and grow their business. This customer-centric approach has become increasingly important for offline retail since the pandemic, as brands face a whole new level of competition from online businesses – through their service delivery. , their competitive prices and value.

Currently, consumers are redefining the way they want to interact with brands and online and offline experiences have no choice but to converge towards an omnichannel retail strategy. This requires a level of sophistication in system integration, data management, and campaign orchestration.

“Improvements in the omnichannel experience ultimately come from a holistic view of customers enabled through data integration and delivered by solutions such as CRM and loyalty management, marketing automation and business intelligence,” Chia said.

Ng added with Hong Kong customers being spoiled for choice and convenience in the online and offline space, brands need to understand and anticipate customer needs. They need to explore technology investment, strong store network and professional staff to be in the forefront.