Newer Technological Trends and Internet Penetration has Motivated Home Retailing in Hong Kong: Ken Research


China industrialization has motivated more consumption, more tourists resulting in growth of the Hong Kong retail market. Hong Kong is a densely populated area with extensive networks of physical stores; however, the rate of internet penetration is high with more number of computer literates.  E-commerce in China continues to progress with the support of various electronic payment methods, increasing delivery options and a wide range of products. Physical store retailers invested heavily in pop-up stores such as temporary outlets in popular malls, famous tourist spots, or any areas without a prior presence to extend the brand and introduce signature products. This trend witnessed a drastic growth over the recent years within Hong Kong retailing market.

According to the study “Home Retailing in Hong Kong, Market Shares, Summary and Forecasts to 2022”, emerging markets, health awareness, and premiumization are the key factors driving the home retailing market in Hong Kong. Premiumization is the market strategy adopted by almost all homes retailers to try to get customers to buy more expensive products by presenting a proposition with a higher value by cross-selling and up-selling of the product. Increase in population of upper-middle-class consumers and the demand for premium products in all the retail segments has boosted the sales within the market. This trend has compelled vendors to sell their products with differential pricing strategy compared to similar products available in the unorganized segment.

The key vendors in Hong Kong home retailing are IKEA, JHC, Pricerite, ParknShop, Yota, Muji, Aeon, Lane Crawford, Sogo and Goods of Desire. China’s home retailing market is segmentation into various products such as food, beverage, apparel, footwear, home improvements, consumer electronics appliances, beauty, and personal care. Home retailing market in Hong Kong is highly competitive and fragmented due to the presence of international and domestic players. The market competition is expected to intensify with various innovative products that meet the changing consumer demands. The increasing health awareness and personal care will strengthen sales in the retail market coupled with rising Hong Kong tourism, social media influence, and e-commerce.

Introduction of online and omnichannel trade within home retailing in Hong Kong has motivated sales through retail stores, mobile stores, online stores, mobile app stores, and through the telephone. Omni-channel home retailing has the number of vendors, more vendors and all the products exhibit maximum visibility. Within the home retailing sector, drugstores, healthcare products, personal beauty products categories account for the highest share. It was estimated that a wide variety of brand, availability, and discounted prices are encouraging online sales within the Hong Kong home retailing market.

Industrialization, premiumization, increase in consumer’s spending limit, newer technological trends and establishment of more online and physical stores nationwide are prompting more sales within the home retailing category in China. 7-Eleven and Circle-K in Hong Kong have established international pure online retailers such as Taobao, ASOS and Zalora with the provision of easy pick-up and return services. It is too early to estimated drastic growth in Hong Kong home retailing market with the recovery of tourism. Increasing tourists in Hong Kong are the key pillars of the city’s home retailing industry. However, the majority of the tourists consider Korea and Japan as their prime destinations where latest fashion and electronic gadgets flourish. All the home retailing products in Hong Kong are available online as well as in physical store which will witness a steady growth over the next few years.

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Ankur Gupta, Head Marketing & Communications