Dickson Concepts, owner of Harvey Nichols department store, looks to founder’s son to lead online retail revamp
- Dickson Concepts (International) will spend US$128 million on revamping flagship Harvey Nichols department store in Pacific Place
Dickson Concepts (International), the owner of department store Harvey Nichols, plans to invest up to HK$1 billion (US$128 million) on technology companies, including HK$250 million on revamping its flagship store in Pacific Place.
Pearson Poon, 24, who was named executive director last Friday, will oversee the project, a move experts say could pave the way for him to succeed his father and founder Dickson Poon, 62.
“We face unprecedented margins compression from online operators internationally,” Dickson Poon, chairman of Dickson Concepts, said at a media briefing on Monday. “Retailers need to [work on] the retail format that faces possible elimination.”
Pearson said the plan, to be launched in autumn next year, would include cutting the space of its existing flagship store at Pacific Place shopping centre in Admiralty by half from 84,000 square feet to 42,000 sq ft, which will reduce fixed costs by a lot. There are also plans to increase the products on offer by three times.
This, he said, will be achieved by interspersing online products with physical products at its stores.
The revamp also includes improving shopping experiences by offering buyers personalised recommendations from stylists through messaging or live streaming function through an online lounge that will allow consumers to ask style and product related questions even at night.
“This allows us to build the service gap that has always been missing online … and compete against pure online operators,” said Pearson.
Veronica Wang, an associate partner at OC&C Strategy Consultant, a consulting firm that specialises in consumer goods, said the revamp is likely to increase store revenue based on favourable response received by Harvey Nichols stores that have undergone similar revamp in the UK this year.
“It will definitely help lift customer stickiness because customers can get more services and help throughout the shopping journey,” Wang said.
But one potential risk stems from the fact that Harvey Nichols has only two shops in Hong Kong and thus would have to make use of stylists from the UK.
“Whether the UK stylists can understand Hong Kong customers’ style, taste and shopping behaviours is still a question,” Wang said.
Swire Properties, which owns Pacific Place, told the Post that renovation work for the new store will start by mid-2019.
“The two-storey store will be consolidated into a one-storey store on level 2 as a result of HN’s new format store concept. With that, Pacific Place will introduce a variety of new retail concepts and experiences at the space that will be made available on level 1,” a Swire Pacific spokesperson said, adding that details of the new offerings will be announced soon.
Tiffany Lung, a retail analyst at Hong Kong-based retail innovation and technology solutions company Tofugear, said: “The scaling down of their store just goes to show how digital is eating up bricks-and-mortar spaces.”
She added that adopting new technology was a smart move by Harvey Nichols, because it can create a seamless shopping experience, from online to offline, and boost customer loyalty within a limited physical space.
Pearson, a Cambridge economics graduate, joined the group as a general manager in October 2016. He has worked with the team that launched the group’s e-commerce operations in Hong Kong, and also with the investment team to drive successful investments and exits, according to the company’s filing to the Hong Kong stock exchange.
He has also worked closely with the leadership team to develop this retail concept combining physical and digital retail.
The company’s shift in focus has lifted online sales considerably.
“Online sales [of the company] this year grew by more than 100 per cent year on year,” said Pearson, who had worked at the investment banking division of Goldman Sachs, where he focused on the China internet sector. “We also expect rapid growth in online sales next year.”
When asked about impact of the US-China trade war has caused to the luxury chain, Dickson Poon said Hong Kong’s retail business has significantly slowed since October.
Although the company’s net profit for the six months ended late September surged 15 fold year-on-year to HK$128.89 million, Dickson pointed out to the challenges arising from a weakening yuan, lower taxes on luxury goods in China, volatile stock market and a correction in the property market that have put a check on consumer spending.
“We believe the retail operation in the second half will be full of challenges, but we hope to deliver good results,” said Dickson Poon.
Of the HK$1 billion planned investments, more than HK$200 million will be on technology-related companies and on enhancing user-friendly online shopping experiences.
When the 62-year-old was asked whether he would pass the helm of the company to his son, Dickson Poon said he was still not too old at the moment and would like to “wait until he works here for a few more years”.
The introduction of Pearson Poon to the public and his promotion as executive director, indicated a succession path, said Kenny Tang, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators.
“Dickson Poon has been running the company for a number of years and has kept a very low profile,” said Tang. “The new generation will bring new energy to the company. Companies like New World Development and Lane Crawford have seen new thinking in the companies’ direction when the new generation steps up.”
Tang said the move could renew market interest in the company, which has seen low turnover in the past few years with no new development.
Additional reporting by Yujing Liu