One might think that Hong Kong perfected the science of shopping long ago, but within the ever-changing urban environment there are always new trends and options on which property owners and retailers can seek to capitalise. For example, a recent study by architectural design firm Woods Bagot examined the growing number of so-called boutique malls and the concept of microretailing that they promote. Developments like the Island Beverley shopping mall and La Foret mall in the heart of Causeway Bay, or the CTMA Centre in Mong Kok, are typical. Departing from the usual style of vertical retailing, seen in places like Times Square or Langham Place, the boutique malls target a quite different crowd. There are no brand-name outlets, clearly separate zones or comparatively spacious common areas. Instead, the basic principle is to cram in as many tenants as possible over several floors, subdivide available space to suit small-time retailers or start-up entrepreneurs, and create a completely different shopping experience. 'It is almost chaotic, but it works,' said Stephen Jones, managing principal in Asia for Woods Bagot. 'The interesting thing is that it is a ground-up development model with fundamentally low-cost rental space. It is catering to a particular fashion demographic and tapping into the desire people have to browse and 'discover', which the big malls don't provide.' In the way they operated, he noted, these boutique malls were almost 'anti retail' since they disregarded most of the usual conventions. Typically, there were no anchor tenants, no attempt to impose a pre-planned mix of outlets, and it was something of a free-for-all in terms of signage and competing for attention. The shops were deliberately 'small box', generally varying in size from 100 to 250 sqft. Advertised monthly rentals, including utilities and management fees, were usually in the range of HK$3,000 to HK$5,000 or slightly more, with both owners and tenants using a model that relied on low price points and high turnover. Nothing prevented tenants from dividing their space to create 'sub stores' or display cases, which could be offered to other retailers. 'The scale of microretailing means someone can take sub-tenants with showcases of no more than 40cm square,' Mr Jones said. 'I would go as far as to say that it is based on the topology of the Asian street market, which is where this kind of retail has its roots.' He added that low rentals and short-term leases made it possible for fashion students or young designers to sell their own work for a month or two. This encouraged an artisanal approach, rather than a mass-market outlook, and meant that shoppers never knew from one visit to the next what clothing, accessories, jewellery or trinkets they might find. That was a particular attraction for the target 16- to 24-year-old age group, who responded to the idea of unpredictability and the chance to come across one-off merchandise. The research by Woods Bagot identified other factors which made the micro-mall concept work and had caused local and international investors to see such developments as a legitimate part of any retail portfolio. It was clear that they filled a gap in the market; leases allowed for short termination periods; rentals were usually calculated per unit rather than per square foot; and the low rentals allowed property managers to maintain interest among potential tenants. In addition, any area fitted out as a boutique mall took relatively little capital investment. Generally, the terms of a walk-in tenancy included shop frontage, ventilation and shared amenities, but separate changing room facilities or storage areas were unlikely because of the need to use every inch of rentable space. Regarding other practicalities, Mr Jones said it was obviously vital to maximise access and security. Architects and designers therefore had to pay close attention to creating sightlines, letting shoppers understand how and where they could move, and balancing the centre of visual gravity of the space, so that sufficient foot traffic would pass every retail unit. It obviously helped that, in a high-density city such as Hong Kong, people were used to 'moving vertically' and happy to jump in and out of lifts. Signage, lighting, music and ground-level advertising were also factors, but given the nature of boutique malls, were far less important or 'coherent' than in more upmarket retail or mixed-used developments. 'We did research and physical inspections at six centres around Hong Kong to understand how people move through the building,' Mr Jones said. 'Vertical movement is the key, as well as sightlines from the lifts because corridors may be only 1.5 metres wide.' He added that it was common for all these centres to have very strong media programmes. They made excellent use of the internet and websites, had very good 'touch points' with their target markets, and had discovered how to create a buzz by spreading word via the virtual community. 'The degree to which news about these microlocations is communicated online is something the big retailers could learn from,' Mr Jones said. Looking ahead, he predicted that property owners would decide to set up boutique malls more deliberately, rather than letting them develop organically. A few floors dedicated to such outlets, aimed at a clearly defined demographic, might then become a part of the synergy in major mixed-use developments across Asia to provide a 'diversity of experience'.
