The global retail sector is in the midst of digital transformation driven by fast-changing consumer expectations. Hong Kong’s retail sector is no exception. The city’s retail businesses – largely brick and mortar shops until recently – are experiencing a seismic change. Hong Kong shoppers are demanding a consumer experience that includes payment options that blur the boundaries of in-store shopping, online, and mobile app purchases. To succeed in today’s highly competitive business arena, Hong Kong retailers need a unified commerce strategy that embraces multichannel and omnichannel engagement to meet consumer demand. Warren Hayashi explains.
Cashier queues are hurting Hong Kong businesses
Creating a frictionless payment environment is important, but more critical for Hong Kong retailers is efficiency and convenience during the in-store experience. According to the Hong Kong Unified Commerce Market Report from 451 Research (that my own company commissioned), nine out of 10 consumers in the city admitted that they have walked out of a store rather than wait in long lines to pay for a purchase, with 30% of saying they chose to make their purchase elsewhere. Crowds and queues may be a sign of a store’s popularity, but they also come with a cost in the form of lost sales. Long wait times at the cashier is believed to have cost the Hong Kong retail industry HK$9.8 billion over the past 12 months.
But long lines aren’t the only reason for abandoned carts – of both the in-store and online varieties – as another key issue arises when retailers do not provide shoppers with all their preferred payment options such as contactless cards and biometric-based payments. According to the report, this is an oversight that has cost Hong Kong retailers HK$5.4 billion in lost sales over the past year. The solution for retailers is to improve the overall consumer retail experience with a range of efficient payment capabilities such as self-checkout, mobile POS and unified commerce solutions.
Understanding shoppers’ expectations, the key to retail success
Retailers today are well-advised to take a deep dive into understanding how expectations for the consumer experience are evolving as Hongkongers adopt an array of digital technologies in their daily lives.
The previously mentioned report divides Hong Kong consumers into three categories based on their digital technology experience and preferences, namely ‘spendsetters’, ‘fencesitters’ and resisters. Over half (53%) are seen as spendsetters’, shoppers keen to embrace the latest shopping experiences where technology blurs lines between online and offline retail. At the opposite end of the spectrum are ‘resisters’, who accounted for 3%respondents. These consumers are typically unenthusiastic and slow to adopt new technologies. In the middle are ‘fencesitters’ (44%), people seen as highly likely to evolve into ‘spendsetters’ as they integrate the use of technology into their daily lives.
To take advantage of business opportunities, merchants are already evolving their unified commerce strategy around digital-savvy spendsetters and starting to experiment with novel technologies via new engagement channels or touchpoints to excite and retain Hong Kong’s digital-savvy shoppers.
Banks and mobile payment systems in Hong Kong have been leading the charge in gearing up towards creating frictionless retail and travel experiences. For example, HSBC expanded its PayMe system for businesses, allowing Hong Kong retailers to receive payments from a customer’s e-wallet app, while the Bank of China has rolled out cross-border payment methods. To promote payment convenience in the Greater Bay Area, the latter allows Hongkongers to make payments at retail stores and even on public transportation in the Mainland Chinese cities simply by scanning the BoC Pay QR code. Introducing frictionless payment experiences like this has proven to be a popular advantage for Hongkongers who are no longer required to make a trip to China and wait for hours to open a bank account to access such services.
This rethinking of payment systems is not limited to financial institutions. Travel, hospitality and restaurant industries in Hong Kong are also actively re-envisioning their unified commerce strategies to secure a competitive advantage. Regardless of the nature of the retail business, comprehensive knowledge of the needs of spendsetters and resisters is the critical first step for merchants to track shopping behaviours across sales channels. It is also an essential factor in developing a future-proof unified commerce strategy, enabling merchants to monitor and plan their cross-channel inventory and transform the consumer experience into one that is truly seamless, frictionless and engaging.
Warren Hayashi is the president at Adyen Asia-Pacific