The Hong Kong Retail Report
Trends and insights shaping the industry
10,000 businesses, from 23 markets
Then we asked 40,000 consumers from 26 markets, including 1,002 from Hong Kong, if they’re getting it right.
Welcome to the Hong Kong Retail Report 2022:
The shape of ambition
When faced with sudden and significant change, we are compelled to examine our hopes, fears, and ambitions in a new light.
As one of the most popular shopping destinations in the world, Hong Kong has been significantly impacted by various restrictions and social distancing measures during the pandemic.
Fortunately, Hong Kong is also famous for its agility and businesses have always been fast adapters to change. Many of them used technology to evolve and to meet the demands of the time, showing incredible resilience and innovation to offer new customer experiences, new ways to pay and new ways to shop.
As a result, 70% of businesses across the retail, food and beverage, and hospitality sectors in Hong Kong grew in revenue by 20% or more in 2021 – above the global average of 67%. Digital transformation has played a pivotal role. In the face of enormous pressure and uncertainty, businesses chose innovation.
Having said that, businesses should not stand still or become complacent. The pandemic has altered consumer behavior and set higher standards. The tech savvy population wants shopping experiences to be slicker, more flexible and engaging – whether that’s online or in-store.
Businesses’ adaptability and willingness to use technology to improve their business and customer experience holds them in good stead to meet this challenge. Because one thing is very clear from our research – businesses that embrace technology, across the entire organization, will outperform those who do not.
These insights and recommendations are provided to help you shape, grow, and realize your ambitions for 2022 and beyond.
Digital transformation is a $200+ billion opportunity.
In spite of – or perhaps because of – the multitude of pandemic-fueled challenges hitting retail, food and beverage (F&B), and hospitality over the last year, businesses invested in digital technologies. The goal? Improving operations and breaking down silos in backend processes and systems such as payments. Almost 1 in 4 businesses connected payment systems to other parts of the organization, such as inventory management and supply chain.
This proved to be the right move. 46% of respondents say their business is now in a better position due to investments to improve operations. And customers agree. 62% of consumers believe retailers used technology well to make their products available during the pandemic. But Hong Kong businesses know not to feel satisfied with their past success – 99% of businesses plan to invest further in this area in 2022, the highest of all markets surveyed.
With so much investment planned, it’s time for businesses to take a holistic view of digital transformation. Connecting operations and customer experience is key to success – not just in terms of sales, but also operational efficiency.
Our studies show that 70% of businesses who connect their payments systems across the organization grew in revenue by 20% or more and 78% of businesses who connect online and offline systems expect to grow in revenue by 20% or more in 2022.
Digital transformation is expected to continue opening up a wealth of opportunities. Our research found that 73% of businesses expect to grow by 20% or more in 2022. Overall, hitting these growth ambitions equates to a HK$218 billion opportunity – and with so many planning to invest further and grow bigger, that number could be even higher. If technological adoption is accelerated, the retail sector could add an additional 8.8 percentage points to its total growth rate over the next five years. The growth potential is the highest in Hong Kong compared to all markets included in our analysis.
How does Hong Kong compare?
Keith Tan — CEO & Founder, Crown Digital
From insight to action
Connecting opportunities with unified commerce
Businesses that consistently perform the best are those that can combine their physical and digital worlds to create a fluid, channel-agnostic experience, which prioritizes the customer. This is unified commerce, the next level up from omnichannel sales.
Omnichannel businesses are great at delivering cohesive cross-channel experiences to their customers. But behind the scenes, backend systems are often unconnected, complicating cross-channel reconciliation, limiting the experiences businesses can offer customers, and hindering their operational agility across multiple channels and regions.
With unified commerce, payments from all channels – online, in-app, and in-store – feed into the same system. This gives businesses more targeted, data-driven decision making, and a more seamless, flexible experience for customers. It also keeps businesses agile since they can add new channels and support new customer journeys quickly because everything’s connected.
61% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic.
The flexible, tech-driven experiences made available during the pandemic have blurred the line between sales channels and encouraged the rise of nonlinear customer journeys. Businesses are providing new or simply different ways to shop, from the convenience of click and collect or curbside pick-up to the perks of brand-owned apps – and customers love it.59% of shoppers reported using shopping apps more frequently during the pandemic than previously – an 18% increase compared to results from our 2020 Retail Report.
Both businesses and consumers have a taste for what’s possible with technology – and now there’s no going back.61% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic. Keeping up with these expectations greatly improves the likelihood of repeat purchases and higher spending. Falling short could result in the opposite: 78% of consumers will not shop with organizations that have a bad shopping experience, either online or in-store.
It makes sense that linking online, in-app, and in-store payments with a single system – i.e. unified commerce – has proved to enhance both brand resilience and customer satisfaction. 46% of businesses say online stores were able to offset the losses at physical stores during the pandemic.
And the more channels shoppers use, the higher their value: 44% of businesses say a benefit of unified commerce is increased sales, 44% also say unified commerce increases loyalty and 42% say it improves customer experience.
This brings us to some interesting findings around loyalty programs. Only a handful of brands are making the most of these programs and it’s an area of the customer experience ripe for innovation. 79% of consumers say retailers should use tech to make their loyalty or rewards schemes easier and more effective. Payments-linked loyalty apps are a good place to start, since 63% of consumers would download a retailer’s app to receive better loyalty rewards.
How does Hong Kong compare?
Saad Ahmed — Managing Director - Regional Head of Commercial, Grab
From insight to action
Cross-channel recognition and payment-linked loyalty
Address customer needs in real time
Payments data enables businesses to build a picture of their customers, their purchases, and their preferences in real-time, across every channel and region. With these insights, businesses can investigate their customer segments, understand their behavior, and shape their strategy with confidence.
Recognize and reward loyal customers
Use customer recognition to make loyalty programs more frictionless by removing the need for a traditional loyalty card or app. When customers make a payment online or in a physical store, businesses can automatically recognize them and award them with points, discounts, or a reward.
63% of consumers prefer to shop in-store.
While shopping apps and online experiences have become increasingly important, that doesn’t mean consumers will be happy to wave goodbye to the physical store. In fact, 63% of Hongkongers prefer to shop in-store. And the pandemic has given the store renewed purpose in the consumer’s mind, with 40% saying they have a new appreciation for being able to touch, feel or physically try products before they buy.
Businesses realize that stores will continue to play an important role: 42% expect the proportion of revenue to increase from physical stores in the next year, and 36% plan to open more physical stores in 2022.
This doesn’t mean we can stock some shelves, throw open the doors, and expect the crowds to come and buy. It’s about creating a destination that entices: 62% of consumers say physical stores should be exciting places to visit. Stores must offer something more than the products and services available online.
Technology proves pivotal in creating an in-store experience worth visiting. From endless aisle shopping – providing kiosks or terminals to check additional stock for home delivery – to offering new ways to pay through QR codes or mobile payment terminals, 70% of consumers say they are more likely to shop with retailers that use technology to improve the shopping experience.
But even more crucial is the ability to connect online and physical channels to ensure a truly seamless experience: 65% of consumers would be more loyal to a retailer that lets them buy things online and return in store. Shockingly, only 20% of businesses say they currently provide this option.
Customer and staff experiences are inextricably intertwined; any technology leveraged for in-store experiences should help, not hinder, sales teams. 67% of consumers say they would love it if in-store sales assistants used technology to assemble items from their online wish list in the changing room ready for them to try on.
How does Hong Kong compare?
Mike West — Digital Director, LUSH
From insight to action
Driving in-store convenience through technology
Enhance in-person payments
Make donations easier
Make donating at the checkout easier for businesses and their customers.
Recognize your customers
Localise the checkout
Present customers with relevant languages and payment options.
32% of businesses use payments data to create a better picture of their customers.
Our research shows that consumers want businesses to recognize, predict, and meet their needs in a relevant and timely way: 56% of consumers prefer retailers who remember their preferences and previous shopping behaviors to create a more tailored shopping experience – well above the global average of 47%. On top of that 45% of consumers like it when retailers serve personalized adverts and product suggestions. Businesses who can leverage real time data insights instead of relying on historic data will be best placed to deliver these more personalized, sophisticated experiences.
The insights unlocked via payments data, particularly unified payments, allow businesses to act more immediately on what consumers are telling them. A growing number of businesses are leveraging this opportunity – but many are still missing out. 29% of businesses use payments data to understand user behaviour and improve customer experience, and 32% to build a better picture of their customers.
Those businesses who are using payments data can identify popular product lines, inform inventory management, create personalized marketing campaigns, and inform decision making – a testament to the wealth of insights made possible through payments data.
Businesses need to strike a delicate balance. Clearly, consumers want businesses to personalize the customer experience and use technology to create unique interactions – this can’t be achieved without data. However, with data breaches seemingly becoming more common and very clear legislation in the form of the Personal Data Privacy Ordinance, businesses have to go the extra mile to ensure they use and store data responsibly.
50% of consumers believe retailers shouldn’t be able to use their data or purchase behaviour information unless they give express permission. And 43% of consumers will only allow data to be stored and used by retailers if there are assurances around security and privacy. Businesses need to stay informed and compliant to protect shoppers and themselves from data breaches and fraud.
How does Hong Kong compare?
Casper Mooyman — Head of Marketing, Domino’s
From insight to action
Securing trust with smooth payment authentication
No ecommerce strategy is complete without a clear plan for Strong Customer Authentication (SCA), especially since consumers expect the process to be fast, with no action required from them. There’s no one-size-fits-all approach to applying SCA, but the right technology partner will take care of this for businesses.
Implementing authentication protocols, even when required by regulations, helps to reduce fraud – but there are additional steps businesses should take to ensure secure payments.
With the Adyen Authentication Engine, we won’t trigger 3D Secure for out of scope transactions or exemptions. We'll also skip 3D Secure if the issuing bank doesn’t enforce it.
A resilient industry with new ambition
Whilst innovation, resilience and adaptability will be required, there is also opportunity. Digital transformation remains a key priority. Consumers continue to drive innovation and flexibility, and businesses are expected to keep up. Investing in technology across the entire business will help you adapt to whatever comes next and outperform the competitors.
At Adyen our focus is, and always has been, on supporting long-term, sustainable growth. We’re committed to ensuring our customers remain at the forefront of this ever-evolving industry and look forward to speaking with you about how payments can be the strategic growth driver you’re looking for.
Opinium Research LLP polled 40,020 adults in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico, Ireland, Austria, Switzerland and India. Respondents were incentivized to participate.
Censuswide polled 11,530 merchants in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico and Ireland. Respondents were incentivised to participate.
Fieldwork was conducted between 23 December 2021 - 8 February 2022.
The sample includes minimum quotas of 100 in retail, 50 in travel and hospitality, 50 in food & beverage per market.
Opinium and Censuswide campaigns are conducted in accordance with all ESOMAR principles and best practice.
We commissioned the Centre for Economics and Business Research (Cebr) to provide analysis on the current state of retail, hospitality, and F&B businesses around the world.