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Hong Kong’s FMCG stays resilient in falling retail market
The health of the retail market in Hong Kong continue to succumb to the protests and ongoing trade disputes Greater China is having with the US. Furthermore, in late October 2019, Hong Kong’s leader Carrie Lam announced that the territory had entered a technical recession, defined as two consecutive months of negative growth. While other industries will no doubt be negatively impacted by the announcement, Hong Kong’s FMCG market has largely been spared. For the first eight months of the year, while retail sales in general fell 6%, the value of sales of supermarket commodities rose 1.9% year-on-year.
Smaller ticket items like personal care and beauty products, along with food items, remain essential. In fact, food delivery services have seen a spike, especially over weekends when more people stay home to avoid the ongoing protests on the streets.
“People still need to eat, still need to go to the supermarket. The usual utilitarian type categories all hold up. It is the more discretionary categories you see the reduction in,” said Greg Hinston, Head of Retail Banking and Wealth Management in Hong Kong for HSBC in a recent media interview.
According to Statista, revenues in beauty and personal care, expected to be worth US$1,937 million in 2019, is expected to grow annually by 3% from now till 2023. As for food, revenues are expected to hit US$8,076 million this year, and grow is anticipated to be at 2.8% annually for the next four years.
Smarter, more interactive retail
Threading through all retail segments, including the FMCG market, is a changing market dynamic and audience preference, which is driving retailers into a digital-driven world.
Sue Temple, Nielsen’s Vice President of Global Consumer Insights, said while physical shops are still needed, connecting online and physical store experiences should be a major focus for retailers.
Earlier this year, Tencent’s WeChat Pay HK and JOOX, in collaboration with Sun Hung Kai Properties, opened a 1,000 square feet of unmanned shop in a local mall over the Chinese New Year festive season. It features gaming, Chinese New Year merchandise, souvenirs, a self-service karaoke station and an AI mechanical arm interactive experience zone. There, customers can pick out items to purchase and have their QR codes scanned. The RFID system then automatically detects the goods at the exit, which customers can then pay for using the WeChat Pay HK system – no waiting in line at cashiers. This experience mirrored what Amazon introduced last year when it launched its Amazon Go, cashier-free store concept.
In an interview with Marketing, Tencent’s International Business Group noted this experience was “a real-life demonstration for consumers to experience smart retail through a seamless and secure mobile payment solution.”
Nielsen also launched a high-tech, innovative store concept in Hong Kong early this year. Its Smartstore is a digital solution that captures shopper insights in a 3D virtual immersive environment. Respondents were tested in multiple live scenarios in a variety of custom store formats to gather predictive information. Their shopper experience provides tracked head, eye and feet movements, alongside 3D heat maps for analyses.
Unmanned stores are created to remove friction and increase productivity. However, the minimisation of time at the store is only effective for retail categories like FMCGs, not for items like luxury goods, which require an experiential environment.
Aside from going high tech, retailers are also faced with an increasingly green-aware consumer market.
On thedrum.com, Becca Ratcliffe, Senior Vice President and Client Services Director for Hong Kong at brand experience agency Jack Morton, said, “Everyone is talking about being green, and shifting from all about being global to increasingly including more cultural aspects to accentuate the beauty and elegance of Hong Kong”. She said “brands simply love to support local communities”.
Sustainability will feature more strongly in the FMCG segment as consumers are becoming more aware and interested in how sustainability relates to products across the whole supply, from sourcing of ingredients to packaging.
With more than 40 years of experience and 140 offices globally, PageGroup has one of the most comprehensive networks of employers and candidates in the FMCG industry. This article is part of our Market Movers series, which attempts to highlight various industry segments across specific markets.
• Growth of innovation & technology
• A legal industry in good health
• The future of retail
• FMCG stays resilient
• Financial services innovation
Visit Market Movers now for even greater insights.