Longing for the personal touch
Luciano Benetton, the founder and driving force behind the clothing chain that bears his name, has announced he will retire. He is one of the great retail gurus and has shown the nature of this sector, which is dependent on the vision and abilities of a few key players.
Other companies are amenable to control by largely faceless men and a few women, but, on Planet Retail, personality is everything.
Successful retailers tend to be larger-than-life characters. Corporations run by committees seem unable to achieve the distinctiveness that dynamic individuals bring to retailing.
Benetton is a good example. Even people who have never entered a Benetton store know of its often controversial and always eye-catching publicity campaigns.
The distinctiveness of these campaigns is directly attributable to Benetton, a politically engaged man who thinks beyond the usual parameters of the fashion trade.
Another good example of an individual who transformed retailing was Jack Cohen, a rough-and-ready bruiser who created the British-based Tesco supermarket business. Cohen, much feared by his rivals, shook up the relatively staid world of British supermarkets with his famous 'pile 'em high and sell 'em cheap' philosophy that made Tesco a byword for value and produced an international business.
Like other successful retailers, Cohen understood that it was not merely good enough to do what others were doing, but slightly better. Instead, he rethought how to make his supermarkets look and feel different.
Anyone who has had the sad experience of visiting Hong Kong's two premier supermarket chains - run by the conglomerates Hutchison Whampoa and the Jardine group - will know their oligopolistic grip on the market is the only conceivable explanation for their success. They have beaten rivals not with retail innovations but by their influence in the property market, and by pressuring suppliers that were providing goods to rivals such as the French-owned Carrefour and Jimmy Lai Chee-ying's online grocery competitor adMart, which failed to reproduce the success of his Giordano clothing stores.
Yet Giordano, no longer controlled by Lai, is another example of how a charismatic retailer helped transform the bargain end of the market and quickly attracted copycats. Lai, maybe not by coincidence, is a political activist in the Benetton mould. He realised that retailing cheap clothing could be innovative and that people wanted not just value, but a distinctive brand that could be sold in attractive stores.
Innovative retailers are thin on the ground in Hong Kong despite its reputation as a shopper's paradise. There are a few notable exceptions, such as the Goods of Desire or G.O.D. chain founded by Benjamin Lau Yuk-tak and Douglas Young Chi-chiu, which also involves itself in social campaigns and sells home products in novel ways.
G.O.D. is not listed and, therefore, not of interest to stock market investors. The fact is that the retail counters listed in Hong Kong are rather underwhelming. Giordano used to be interesting when Lai was running it but no longer. Its imitators, such as Baleno, are unlikely to get the heart racing. Its share price slipped following its listing last year and has not recovered. Investors can get a share of the biggest retailers only by buying into the big conglomerates such as Hutchison (for ParknShop, Watsons and Fortress) or Jardine (for Wellcome, Mannings, 7-Eleven, and so on) and then there's Li & Fung for a share in the business of Toys 'R' Us and Circle K, both of which are foreign-owned franchises.
This is a disappointingly thin field and is at least partly explained by the absence of dynamic retailing gurus leading these companies.
As ever in Hong Kong, success in retailing is determined by access to the property market. Investors interested in buying a stake in this sector are probably best advised to go to the big property players who collect the retailers' rent. This includes all the usual suspects in this sector.
However, Hong Kong is a dynamic place, and if the still thwarted competition bill ever becomes law and amounts to more than window dressing, the scope for new retailers is endless.