CONCRETE ANALYSIS

Lack of Hong Kong shopping centre seating risks losing business to internet

The lack of seating in big HK malls raises the risk of retail business being lost to the internet

PUBLISHED : Wednesday, 30 October, 2013, 5:06am
UPDATED : Wednesday, 30 October, 2013, 5:06am

By any measure, the past decade has been prosperous for retail landlords in Hong Kong. Retail sales have almost tripled in the past 10 years while retail space has more or less flat-lined, rising by an average of less than 1 per cent a year.

Given that most tenants in key shopping centres have rental agreements tied to their turnover performance, there is a close relationship between sales growth and how much landlords receive in rent.

With such a golden goose, it would seem obvious that landlords would be heavily focused on ensuring that customer experience gets top priority.

But how often can you find somewhere comfortable to sit in a shopping centre?

Heaven forbid that the provision of a seat, without the need to order a coffee at the same time, might terminate our most fierce consumer urges or, worse still, start attracting the wrong type of customer that doesn't view these centres as a 'retail paradise' but as a haven for free air-conditioning.

Most major centres in Hong Kong are sadly lacking in basic places to take a rest.

In the large centres in the core commercial districts, seating ranges from sparse to non-existent. Where it is provided, it is well utilised.

Foot-fall traffic monitors can routinely measure shopper "dwell time" and evidence suggests seats always attract people.

Conversely, where such basic facilities are absent, tracking reports show consumers finding their own solutions. Reports of people entering shops and walking directly to the seats outside a changing room and then, once suitably rested, heading straight out the door are not uncommon.

Where office buildings interconnect with a shopping centre, smart customers can be seen heading up one level to an office lobby for a momentary breather. This issue seems peculiar to Hong Kong's shopping centres.

Certainly, in the many centres that Woods Bagot has designed on the mainland and elsewhere, seating is an integral part of the customer experience. Rather than backwaters, these should be located in convenient places around key circulation nodes, be it a high-end mall or one targeting the mass market.

For every non-spending visitor landlords might imagine they want to deter, there are those that do have genuine intentions and are more likely to be left annoyed.

One of the few exceptions in Hong Kong is the MTR's Elements shopping centre.

Elements positively invites customers to sink into its seats, with their soft velvet upholstery. Perhaps it takes a transport operator to recognise the importance of allowing customers to sit down once in a while.

If landlords are happy to take your money when you choose to buy, why begrudge customers an opportunity to take a break once in a while? On the sale of a HK$1,000 item of clothing in an up-market boutique, typically about HK$150 will go to the landlord in rent, based on average industry standards, so consider that the next time you struggle to find a convenient perch.

There is one place where one is guaranteed a free seat and even a cup of tea and a biscuit. Of course, that's at home in front of the computer browsing through favourite retailers' websites at leisure.

Hong Kong has been surprisingly slow to take up internet retailing, and online sales as a proportion of total sales are low by international comparisons.

Across the border, however, it's a different story and the nation is expected to take over from the United States this year as the largest e-commerce market in the world by total consumer spending.

However, watch this space. A number of reports are predicting Hong Kong will experience double-digit growth rates for business-to-consumer e-commerce, and rapid changes in our shopping habits are being picked up.

If this city's retail landlords are to face the challenge of internet retailing, they need to convince us that their bricks are better than our clicks.

That requires an array of tools geared at devising new ways of providing extra convenience as well as added retail theatre and stimulation.

Dedicating a few areas for seating without being harassed by a security guard would be a small step in this direction.

Christian Wright is senior retail consultant, Asia, of Woods Bagot.

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