How Hong Kong retail is rethinking value amid global geopolitical tensions

The intensifying conflict in the Middle East has cast a complex shadow over global trade routes, though its immediate repercussions on Hong Kong remain a study in calculated resilience. Financial secretary Paul Chan previously characterised the situation as having a "minimal impact" for now, emphasising that the government remains committed to deepening economic ties with the Gulf region despite heightened geopolitical risks.

This strategic pivot toward the Middle East is seen as vital for the city’s long-term capital growth, even as global logistics become increasingly volatile. While the macro-economy holds steady, the city’s retail sector is quietly waging a battle against surging "invisible" costs to keep daily necessities affordable.

Major supermarket chains and retailers are currently shielding consumers through aggressive defensive tactics, such as direct sourcing and leveraging massive economies of scale to bypass traditional supply chain markups. For example, Wellcome’s “Everyday Value” price-lock programme offers over 400 essential grocery and fresh food items at fixed low prices, providing savings of around 15% to 40%. 

In conversation with MARKETING-INTERACTIVE, Darren Chan, managing director, food, Hong Kong & Macau, DFI Retail Group, said Wellcome upholds the mission of “Always fresh, always value and always here for you” and is dedicated to providing quality products at great value to customers.

"We continue to strengthen our sourcing strategy through greater direct sourcing and supply efficiency to deliver better value for customers. This includes recent strategic partnerships with COFCO Group and Dingdong, which enhance direct sourcing and ensure a stable supply of fresh products."

Meanwhile, IKEA offers Hong Kong customers genuine value for money, combining affordability with quality and dependable after‑sales service, said Elliot Lee, managing director, IKEA North Asia, DFI Retail Group. "Our new lower price campaigns, together with over one million product tests conducted annually in our test lab, ensure functionality, safety and durability."

A DFI spokesperson said Mannings, 7‑Eleven, Wellcome and IKEA, operated by DFI Retail Group, remain focused on building resilience and adapting strategies to serve customers better, while maintaining stable operations and strong value propositions. “Given the volatility of global events, we remain cautious and continue to monitor future developments closely. This focus is reflected in how each of our brands continues to strengthen its offer to customers.”

Beyond the offline retail industry, Xen Chia, strategic marketing director at XGATE, said his clients in the beauty and skincare categories shipping from Europe to China are facing skyrocketing logistics costs because of the Middle East conflict. “Higher shipping fees, delayed restocks, squeezed margins on everything from serums to face creams - it's hitting business across channels.”

Echoing his thoughts was Adrian Lee, chief client and operating officer of WPP Media Hong Kong, who said across both domestic Hong Kong retail and travel retail, the focus has shifted from simply driving volume to rethinking how brands maintain desirability, relevance, and conversion as consumer behaviour changes. “Any category that depends on impulse buying is being squeezed hardest, while staples and value-led items are more resilient but not completely immune.”

How retail brands are navigating the norm

With consumers increasingly price-sensitive due to macro-economic pressures, Chia said retail brands need to lean into AI and martech to truly transform marketing. “When a customer clicks on a banner ad or messages a brand on WhatsApp, they're already showing buying interest. But if we reply with a generic 'Thanks for reaching out' or just throw a basic coupon at them, we've completely wasted the moment.”

Instead, the instant that message comes in, the customer service person should recognise the user's history, such as a gold member searching for a refill of a specific serum. He added, “Then the real conversation starts. 'Hey Lisa, I see you love that serum. We have an exclusive deal for your next purchase at our Causeway Bay store. Would you want me to set one aside for you to pick up tomorrow? Or I can courier it to your office by 3pm.'”

Meanwhile, WPP’s Lee said the agency is working with its client set to move beyond generic last-click attribution and transitioning towards a more advanced understanding of customer journeys. “Uptake of our outcome-based media buying models is also contributing to tangible business growth for client partners. This shift is particularly important for sectors such as hospitality, where performance is ultimately judged on bookings and revenue.”

Marketing beyond price is also essential. Lee added that Hong Kong's advantage has never been about price alone; it's speed, convenience, service, authenticity and availability, all wrapped up together that make a compelling difference. Price sensitivity will absolutely make Hong Kong consumers more willing to consider purchasing cross-border or online, he said.

“However, access to high quality data in a privacy-safe environment means marketers can now gain a better understanding of a customer's specific needs and how their purchase decisioning is impacted at any given time by urgency, the need for quality and how much they trust a brand.”

Moving forward

While the duration of the war remains a million-dollar question, Chia said for local HK customers earning Hong Kong dollars will still be able to afford quality goods, mainland tourists may drop as RMB weakens due to exchange rate. "Hong Kong retailers should focus on building loyal customers - potentially their purchasing power holds steady, and they value authenticity and tax-free prices more than just cheap deals. My strategy? Double down on local loyalty, not cross-border bargain hunters."

Finally, it’s important to recognise that retail success in Hong Kong is increasingly less about competing on price and more about competing on relevance, Lee said. "Brands that can identify intent signals in real time, personalise experiences across channels and remove friction from the path to purchase will be better equipped to retain local spend, even as cross-border and online options expand."

Alex Liu, managing director, Mannings, Hong Kong, Macau and China, DFI Retail Group, said the group is prioritising authentic, high-quality products, professional advice and heartfelt service.

"Through a strong omni-channel approach, Mannings is focusing on more personalised, customer-centric experiences by integrating digital touchpoints with professional in-store services. This enables Mannings to better support individual wellness needs, differentiate beyond price alone and continue supporting customers throughout their wellness journeys."

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