When a mall closes in the US, another one opens in Hong Kong. Perhaps an exaggeration, but Hong Kong is not remotely close to facing the same turmoil as in the United States, with for instance retail sales showing a healthy 12.9% growth in May (HKRMA). So how do malls in Hong Kong continue to thrive when physical retail in so many other countries is under severe pressure?

Convenience

Hong Kong has the densest population of shopping malls in the world. Instead of being based in far-flung out-of-town locations that you need a car to get to, malls here are often located in the same places where consumers live and work. As such, they generally offer greater convenience than the online channel in terms of immediacy and it is therefore not surprising that ecommerce only accounts for around 5% of overall retail sales. Compare that to a level of close to 20% in the United Kingdom!

Lifestyle destinations

Putting the lack of online competition aside, it has to be said that malls in Hong Kong have also become lifestyle destinations in their own right – places where customers actually want to while away an afternoon. Different tactics are being used to achieve this:

Appealing to both tourists and locals

Harbour City in Tsim Tsa Shui was known to locals as a shopping mall that was mainly frequented by PRC tourists. However, the mall renovated its Ocean Terminal wing in 2018 with a new tenant mix of food and retail plus pop-ups, that are unique to the local market. They were the first to bring Singapore’s coveted Irvin’s Salted Egg Chips to Hong Kong (creating endless queues in the process) and the newly built Ocean Terminal deck is a photo-worthy spot that manages to attract more locals than tourists and also doubles as an event space.

Mixing art with retail

Though this tactic is not restricted to shopping malls, Hong Kong has begun converting heritage sites into contemporary spaces that are part exhibition and part retail space. The successful PMQ site has inspired a number of other sites, including ex-police station Tai Kwun as well as the Mills, an old textiles factory. These spaces not only have a large “Instagrammable” appeal, but also bring in many local designer start-up brands and even host workshops to facilitate the art experience. The concept is now also being used in malls, with New World Development’s K11 pioneering the concept of “museum retail” at its forthcoming K11 MUSEA mall.

Localised offerings

While pop-ups are not exactly a new tactic, what is interesting is that a number of malls are turning to smaller local brands to provide a more relevant offering to those that live in the area. For local brands this provides an opportunity to expand their footprint at minimal cost, but malls also benefit as they are able to offer a more dynamic experience that helps foster a community vibe. D2 Place at Lai Chi Kok is a prime example as it hosts weekend markets that support local arts and crafts businesses. Larger malls such as Hysan Place and Olympian City are also getting in on the game.

What’s next: a connected mall strategy

While there is no suggestion that malls in Hong Kong are under significant threat in the short-term, there is no better time than now to find out what consumers may want in the future and how malls need to evolve to cater to those expectations.

Thinking about the mall of the future, we believe that malls should offer a personalised and tailored shopping experience, seamlessly driven by technology and analytics to enhance the customer experience whilst boosting footfall, sales – and the overall value of real estate assets.

Too often mall apps are deleted within minutes as they serve no true purpose except for pushing marketing content. But that is not to say that apps should be ignored. The convergence of the digital and physical – where an app ties in with the mall operations – can actually help create a customer-centric place that will help the mall become a lifestyle destination.

Having such a ‘connected mall’ application – for instance to arrange bookings, centralised shopping and loyalty schemes – not only personalises the experience for customers, but can also deliver actionable insights to both operators and tenants to track consumer shopping behavior and patterns. Overall, the app should come as part of a “Work, Play, Live” formula so that it’s not seen so much as a mall itself, but part of a city.