Circle K chief on adapting to digital shift: keep up, or die

Circle K introduced a digital loyalty programme that has seen growth accelerate and more customers using Octopus card for payment

PUBLISHED : Wednesday, 26 September, 2018, 7:02am
UPDATED : Wednesday, 26 September, 2018, 8:35am

Visitors to Hong Kong may find it strange to be accosted by men and women outside supermarkets and convenience stores, especially as they ask not for money but the little stickers that the cashiers hand out with purchases.

Many shoppers hand them over because it requires patience to amass the required number, and dexterity to stick them in neat little rows on a sheet to redeem a giveaway, usually household electronics or kitchenware.

When Richard Yeung started brainstorming ideas with his team to better engage customers at Circle K, the round-the-clock convenience store chain that he heads as chief executive officer, one of the first innovations was to digitise the loyalty programme.

Li Ka-shing, Jack Ma team up on mobile payments

“The digital shift means that consumers are changing quickly, and retailers are struggling to stay relevant,” Yeung said in a recent interview at his office in Sha Tin. “If you do not keep up, you’re dead.”

Circle K introduced a mobile app called OK Stamp It, which can be linked to the Octopus card, a transport card widely accepted as a payment method in many Hong Kong stores.

When customers use the Octopus card to pay for items at any of Circle K’s 332 stores, the system automatically loads the redemption stickers into the app. No more digging into handbags for stray stickers or forgetting to hand in the completed sheet.

Encouraging more people to pay with their Octopus card also had the added benefit of speeding up transactions at the cashier, a critical factor because many convenience stores are located in proximity to each other and customers tend to patronise the one with the shortest queue.

With the Octopus, Circle K strives to clear each transaction in about a second compared with six seconds for the average transaction, Yeung said. The contactless technology behind Octopus is faster than the QR code, he said.

The QR code, a two-dimensional bar code with a random pattern of tiny black squares against a white background, is popular in the mainland and utilised by Alipay and WeChat Pay, the two dominant mobile payment apps.

The mainland has been pushing ahead in the blending of online and bricks-and-mortar retail, with on-demand local services companies like Meituan Dianping and Alibaba Group’s extending the reach of a physical store by pairing mobile commerce with quick courier services, delivering everything from meals to medicine to flowers.

Some smaller family-run stores have also used Alibaba's Lingshoutong technology to digitally track purchases and manage inventory, allowing them to gain better insight of their store operations.

Google Pay features bear striking resemblance to Chinese platforms

Back in Hong Kong, since introducing the digital loyalty programme, Circle K has accumulated over 1.1 million OK Stamp It users within 18 months, thanks in part to the ease of using the redemption programme. Within the last month, 60 per cent of its members have visited Circle K stores.

“The biggest [customer] demographic who use the OK Stamp It app are housewives,” Yeung said, who are typically more sensitive to value for money deals. However, users range from students aged 12 and above, to elderly shoppers aged around 65.

Circle K’s year-on-year sales growth accelerated from 4.3 per cent in 2016, when the app was launched, to 5.4 per cent in 2017.

Mobile payments to overtake credit card use by 2019, report says

Before launching the OK Stamp It app, about 30 per cent of customers paid with their Octopus card, but that figure now exceeds 40 per cent after launching its digital rewards programme.

Circle K’s competitor 7-Eleven also has its own Hong Kong digital loyalty programme called 7-Fans. Similar to OK Stamp It, the app has a mobile wallet function and points redeemed go towards coupons within the app, which users can redeem in-store.

Alibaba is the parent company of the South China Morning Post.