In a challenging environment amid slow global growth, Hong Kong’s retail sector could appeal to the changing consumer landscape through digital technology, particularly in China where more than two-thirds of online shoppers are making cross-border purchases. Angel Young, Nielsen’s Managing Director for Hong Kong and Macau, explains in a recent interview
By Kenny Lau
What is your professional background and your role as managing director for Hong Kong and Macau?
I am a lifer at Nielsen! Last year marked my 20th year with the firm. I first joined as a senior analyst working in the client servicing team, and was very curious about consumer behavior. I love analyzing numbers and engaging with clients on what the data means for their businesses. It was these early experiences that enabled me to quickly understand evolving client needs in a fast-changing market.
In my various roles over the past ten years, I defined stretch goals, went out of my comfort zone to learn, acquired different perspectives and adapted new leadership styles. I would say that no two days are alike at Nielsen. Attracting and developing talent are among our key goals, and we focus on creating the best experience for our people. You can foster innovative ideas, make a difference and grow with us.
What exactly does Nielsen do?
Nielsen is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. The “Watch” segment provides clients with measurement across all devices where content – video, audio and text – is consumed. The “Buy” segment offers an industry’s global view of retail performance measurement.
We have a long heritage of helping companies measure and improve their performance by providing end-to-end consumer insights and by enabling faster and better business decision-making. We address clients’ issues at different stages of their business – understanding the most profitable consumer segments, developing a distinctive concept and a marketing message, and measuring sales impact.
What can you tell us about Hong Kong’s retail sector?
Retail is one of Hong Kong’s key sectors, both in contribution to the total economy and as a driver of the labor market. As of 2016, retail sales made up about 18 percent of Hong Kong’s total GDP and employed 9 percent of the total labor force. With the influx of Mainland tourists, it has been one of the key growth engines over the past few years.
Our annual Mainland traveler study shows that that more than 80 percent visit Hong Kong with shopping in mind. Growth in sectors like luxury, department stores, and FMCG has been influenced by these travelers. They are also here for the total experience, and travel to Hong Kong for concerts, local food, sight-seeing and exploring places.
While we have seen a decline in Mainland travelers recently, Q1 2017 numbers are showing signs of positive recovery (+3 percent year-on-year value growth in the month of March alone) driven by a rebound in traveler numbers. This suggests a gradual bounce back throughout 2017 and a new normal in the retail sector. Brands that focus on attracting Mainland shoppers will continue to see opportunities emerge.
Why are Mainland consumers such a critical part of the equation?
Their arrival has been closely linked to Hong Kong’s retail sales and will likely remain so for the future. We have seen more brands embracing this phenomenon by creating specific marketing and engagement strategies for Mainland travelers. Currently, Hong Kong still has an edge over other destinations, like Japan, Korea, and Taiwan, in terms of variety of offerings for these travelers.
Additionally, brands need to accelerate their e-commerce presence to appeal to the changing consumer landscape of China. Currently, more than two-thirds of online shoppers are making cross-border purchases These consumers value genuine, high-quality overseas brands, and they benefit from overseas online prices often being lower than those in the local market.
Where should we be looking for these opportunities in Hong Kong?
The areas of opportunity include Hong Kong’s local population (millennials who are growing up in a digital world as well as those increasingly interested in natural and health products), Mainland travelers who demand goods as well as financial and insurance products, and online Chinese consumers who buy via cross-border e-commerce platforms.
The increasing potential of an integrated PRD region, the “One Belt, One Road” initiative, and the growing inter-dependence of trade between China and Hong Kong will continue to create further opportunity in the city. It is a shifting landscape where it is critical for brands to embrace these changes, innovate and focus on delivering on consumer demands.
How has digital technology influenced market behavior?
Hong Kong has one of the world’s highest mobile subscriber penetration rates at 230 percent, and we’re seeing a big influence on all aspects of consumers’ lives. According to our research, 92 percent of consumers spend more than 4 hours a day, everyday, online. With changing consumer viewing behavior (i.e. video on demand), advertisers are moving advertising dollars from offline to online.
According to The Hong Kong Advertisers Association and Nielsen’s 2017 Adspend Projection, total online advertising spend will surpass offline this year. With massive marketing budgets being spent on digital, the industry needs transparency and accountability. It’s important to measure effectiveness for advertisers, agencies and publishers.