The Outlook for Retail in Hong Kong and China 2016/17
Home Essentials is the world's leading furniture rentals company which also operates home furnishings retail stores around the world. We sat down with Chris to discuss rents, agile retail strategies and how to win the game.
01 You relocated your store from Horizon Plaza and moved to Lyndhurst Terrace in Central, where you took out 8,000 sq ft of retail space. You are currently into your third year there and increasing sales year on year. Can you share with us a little on your agile retail strategy?
Great question… you know more than most that “branding” is neither a logo nor a slogan. It is a promise! For 14 years Home Essentials was widely known for furniture rental. We brought the concept to Hong Kong in 1998, and it was successfully ingrained into the public that this is what we do.
The company name was not Home Exceptional or Home Extraordinary. It is Home Essentials. If you need home items on a short-term basis, the essentials are with us. It worked very well. As time progressed, we needed to find a way to monetize the “goodwill” of our customers. We had thousands of happy customers who would only come to us to rent. But what about the other elements of our experience? So we decided that a flagship retail location on a high street in Central would allow us to showcase our offerings to a whole customer base – extend the experience with an entrenched customer base, and introduce us to a new constituency that did not even know we existed.
Elevating a brand is always a “hostile” experience as those occupying the space you want to enter will not welcome the advance. It is further complicated by not wanting to alienate the core customer base. The location in Central along with excellent guidance from Base Creative allowed us to make the transition. Thank you.
02 What is your economic forecast for retail in Hong Kong and China for the next 1-2 years?
Retail in Hong Kong will experience some of the most cathartic challenges in its 200 years of history. Unlike other cities in the world, over 50% of Hong Kong retailing depends on some form of tourism, whilst the balance caters to local needs. A surreal perception exists among Hong Kong people that the two are not intertwined. This is catastrophic. They are! A drop in one of them impacts the other. Yes, density (the densest place on Earth) presents a false sense of security and protection, but the drop in tourists and expatriate arrivals reduces disposable income. Vacancies will rise in the secondary and tertiary areas. The core areas (Central, Causeway Bay, Tsim Sha Tsui…) will remain full but at lower rates.
China’s retail environment is a question that no one can answer. You have more retail square footage coming onto the market than the USA produced in 100 years. There are simply not enough retailers to fill the spaces. More importantly, you have the highest usage of Internet shopping in China.
03 Can you give us 3 key strategy points that you feel strongly influence retail success?
Listen to the market and the customers. Stop thinking that retail is seasonal and style-driven. It is a need-driven business. People part with cash when they have to, and it is not influenced by what the latest home furnishing style is.
04 You studied business at Harvard and after that you were a leader in the USA property market - does this give you an edge in Hong Kong? What do you feel is important for winning at retail?
Harvard was/is awesome. However, prayer is often more effective IF you are willing to listen! Life, business… are best when combining all of life’s experiences. You cannot simply rely upon one of them.
05 If you were starting out again tomorrow knowing what you know now, what business would you go into?
CEO of Home Essentials