E-commerce will triumph over bricks and mortar in the final frontier of retailing

Hong Kong’s retailing and grocery landscape is the land that’s been forgotten by time and technology. Its stubborn resistance to change is formidable. It’s one of the reasons why visitors to the city are astonished to find that a city with so much capital and education is so far behind China in technology.

Last week, I reflected on how the city’s luxury malls and department stores are more reactive than proactive to technology. At their best, they are aware of online trends. At their worst they are stuck in their 1980s profit-per-square-foot model. Being a rent collector is enviable, but uninteresting, because it discourages innovation.

I don’t foresee Hong Kong’s Landmark building, or Pacific Place malls, being converted into tumbleweed infested, skateboard parks like some American structures.

Some of the senior property executives and mall managers I have spoken to, are curious and aware of the unspecified, but real threat of social media and online retailing - especially when combined with a millennial generation that apparently doesn’t value luxury goods. But, they haven’t been able to see the next new thing.

Corporates need to see historical data before they believe. But, the very problem is that you can only envision the future if you are in the middle of changing it.

Back in 2013, beyond Beijing, Shanghai, Shenzhen and Guangzhou, mainland China was a luxury label desert. You could not find high-end malls or boutiques that sell the branded goods sought by mainland shoppers, which is why so many visited Hong Kong. Second tier cities suffer from a luxury goods shortfall due to a lack of upscale malls. More than 50 of these cities have a combined population of over 50 million- enough to sustain luxury brand sales.