Retail properties

Hong Kong malls test experiential concepts to sustain traffic in battle against e-commerce

Hang Lung Properties provides 9,000 square feet of space to start-up Strokes in Fashion Walk that features Hong Kong’s first indoor mini-golf course set within a restaurant

PUBLISHED : Sunday, 24 December, 2017, 9:15am
UPDATED : Sunday, 24 December, 2017, 9:15am

Hong Kong’s mall operators are going out of their way – from assisting start-ups in effectively executing their plans to offering them vast amounts of space – to accommodate and cultivate tenants that offer experiential consumption opportunities amid changing consumer tastes.

According to Katherine Lo, general manager of leasing and management at Hang Lung Properties, customers nowadays are looking for new and varied experiences when they go shopping.

“We have to keep enhancing our tenant mix, introduce new and upcoming trendy concepts, organise creative and diversified marketing programmes to excite and engage with our customers,” she said.

One tenant benefiting from the Hang Lung’s efforts is Strokes, which claims to be the first restaurant in Hong Kong with a mini-golf course. The 9,000 square feet concept in Fashion Walk on Kingston Street in Causeway Bay also includes a cocktail bar and a multi-purpose room.

Edwin Chan, co-founder of the start-up and formerly an actuary at Bank of England, hopes it can supplement the lack of indoor recreation at convenient locations in Hong Kong, as people have grown bored of karaoke, watching movies and dining only.

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“Some malls feature pop-up experiences such as Christmas markets and performances, but they are not ongoing,” he said. “There are similar indoor recreational venues in industrial buildings, but they are not as easily accessible with a less enjoyable atmosphere.”

Chan noted the effect of e-commerce in the rise of experiential consumption.

“Mall operators are trying to use experiential consumption to attract customers since shoppers can buy anything online.”

Chan said that other developers too had asked the start-up to set up the restaurant in their premises, but they decided to go with Hang Lung as they backed them and “placed a lot trust in renting their space to a small independent company like us.”

Strokes expects to generate revenue of HK$2 million to HK$4 million a month and break even in one year.

Mall operators are trying to use experiential consumption to attract customers since shoppers can buy anything online
Edwin Chan, co-founder of Strokes

The confidence may not be misplaced as Jason Yeung, the other co-founder of Strokes, has experience in founding and managing another indoor recreational and team-building venue, Crossfire Arena. The facility in Quarry Bay features neon light tricks, archery, dodge ball and bubble soccer, and boasts of such clients as Shangri-La Hotels and Resorts, Bloomberg, Deloitte, HSBC, LinkedIn and Manulife.

Strokes also enjoys Hang Lung’s special care, such as marketing support through preferred promotions in the mall. The mall operator has introduced the management of Strokes, who have invested HK$10 million, to external networks and partners for potential partnerships.

The target market of Strokes is young professionals, artists, and companies seeking unique venue spaces for business, entertainment and functions.

Other tenants at the mall that offers experiential opportunities for consumers include Sony PlayStation, which has virtual reality gaming booths, a florist and a pub that serves craft beer.

According to Terence Chan, head of retail services at property consultancy JLL, the trend is likely to sustain as these entertainment operators can help drive traffic in shopping malls.

Some examples include Speedway Diner featuring go-kart track experience in Kowloon City Plaza, indoor playground SuperPark at One Silversea in Tai Kok Tsui, Ocean Bubble House in D.Park in Tsuen Wan and playground NAMCO in PopCorn Two mall in Tseung Kwan O.

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“The key to long term success of this kind of entertainment providers is flexibility, adding new elements or revamping at regular intervals to make sure customers are well surprised and excited,” Chan said, adding that mall operators will consider their strategy in deciding which entertainment operators to house.

“Community malls will introduce family-oriented entertainment, while the more high-end ones may consider fancier facilities such as cinemas with 4D screening technology.”

“But the downside is that entertainment operators occupy more space, from 5,000 sq ft to as much as 10,000 square feet. They need lower rents too. So it is a commercial decision in whether it is worth it to attract the extra footfall,” he said.