More affordable rents make way for experiential retail
Play-before-you-buy stores are cropping up in Hong Kong, where it was previously viewed as too expensive
Falling retail rents in some of Hong Kong’s premier districts have made way for spaces where shoppers can do more than just buy: they can play first.
Take, for instance, French sportswear brand Decathlon, which in October opened a store in the heart of the traditional business district at the Entertainment Building on Queen’s Road Central. Here shoppers can shoot some hoops, play ping-pong, practise Pilates, jump on a scooter or even join free fitness workshops.
This type of “experiential retail” has gained traction in other markets in recent years. Landlords are eager to introduce experience-oriented concepts to increase footfall and time spent at their developments, a kind of counterweight to online shopping.
But such spaces are newer for Hong Kong, where smaller store fronts and high rents kept landlords bound to more traditional set-ups.
Now lower rents are helping drive the change. Rents for high-street shops in the core four shopping districts – Central, Causeway Bay, Tsim Sha Tsui and Mongkok – and prime shopping centres fell 37% and 32% respectively in 2020, data compiled by JLL shows.
“Now that online shopping is a more common way of life in Hong Kong after the pandemic, shops will have to become more than just a point-of-sales,” says Oliver Tong, head of retail for JLL Hong Kong. “Shopping mall operators and retailers will really have to up their game in creating new customer experiences to attract shoppers to visit.”
Hong Kong will have to reposition itself as a leisure and entertainment destination for tourists and locals, he adds.
Landlords and retailers are already pursuing such strategies.
LEGOLAND Discovery Center Hong Kong, set to open at the K11 MUSEA shopping mall in Tsim Sha Tsui, will be a 30,000 square foot indoors playground dedicated to what is arguably the world’s most famous brick. Designed to encourage open play and creativity, it will house two rides, build and play zones and a 4D cinema.
Hong Kong’s first motion e-sports stadium opened its doors at Henderson Land’s H Zentre in the Tsim Sha Tsui commercial district, making it the project’s biggest retail attraction. The brainchild of Asia Motion E-Sports, the 3,400 square feet AME Stadium features multi-player, professional sports VR simulations for skiing, boxing, rowing, horse racing, and cycling.
Exclusive to global beauty retailer Sephora’s first store in the Kowloon area is a screen featuring bestselling products and video submissions on recommendations from the local Sephora Community, as well as a magnetic wall for customers to create their own branded photo opportunity.
JLL believes retail property will be the first sector in Hong Kong to bottom out and rebound in 2021, driven by mid-to-mass market retailers that are more dependent on stable domestic demand. Rents of high-street shops and prime shopping centres are expected to rebound up to 5% in 2021 as the economy gradually recovers and travel resumes in time.
As road and rail networks widen, the ability to travel between Hong Kong and the other cities in the Greater Bay Area within an hour may be an impetus for more cross-border retail experiences.
“The so-called ‘one-hour living circle’ could bring potential demand for Hong Kong’s retail sector in the medium term,” says Cathie Chung, senior director for research at JLL Hong Kong.