Department Stores in Hong Kong, China

PROSPECTS

Growth of department stores driven by increased spending of locals and tourists

Department stores is projected to post positive value growth (in both current and at constant 2018 prices) over the forecast period, with a performance driven by rising consumer sentiment. As Hong Kong’s economic outlook continues to improve, an increasing number of consumers are expected to loosen their purse strings and increase spending on discretionary items.

Building customer loyalty through membership programmes

To increase brand loyalty, players in department stores launched membership programmes to encourage longer-term consumer loyalty. Leading department store Sogo for example, encouraged consumers to download the Sogo Rewards app to collect reward points when shopping in its stores.

Department stores to focus on experience

Over the forecast period, the purchasing behaviour of local consumers is expected to continue evolving, with greater emphasis placed on having a positive shopping experience. In response to this, players are expected to continue to invest in improving in-store experiences.

COMPETITIVE LANDSCAPE

Sogo strengthens leadership of department stores

In 2018, Sogo (Lifestyle International Holdings Ltd) strengthened its leadership of department stores by gaining value share, to remain ahead of Yata, Lane Crawford, and AEON. Sogo experienced strong value growth in 2018 benefitting from rising footfall and its “stay-and-buy ratio”.

AEON continues to post positive growth in 2018

In 2018, department store AEON continued to experience growth in current value sales. Its strong performance was not only due to improvements in Hong Kong’s overall economy but also to efforts taken to improve the brand’s standing, such as through the renovation of its Kornhill and Whampoa stores.

Al-Futtaim takes over Marks & Spencer’s retail operations in Hong Kong

In January 2018, international department store brand, Marks & Spencer announced that its retail operations in Hong Kong will be sold to its franchise partner, Al-Futtaim Group. The sale is in line with the global brand owner’s plan to focus on strengthening its operations in the UK.

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