The FGRT team attended the 2017 MIPIM Asia Summit in Hong Kong. Selected takeaways from the meeting include:
The FGRT team attended the 2017 MIPIM Asia Property Leaders’ Summit in Hong Kong. Dedicated to property investment and retail real estate, the Summit gathers top-level real estate professionals from around the globe. This year, over 900 participants—half of which were CEOs and Chairmen—joined from 570 companies.
Below, are selected takeaways from the conference:
1) Localization Is Critical to Capture the Fast-Moving Nature of Opportunities in Asia Pacific
During the panel discussion titled “The Rising Opportunity in Asian Hospitality,” the panelists—representing the private investment and public and developer segments—discussed how best to position themselves to capitalize on opportunities as regions develop new tourism opportunities. The discussion began with the gaps emerging in the hospitality industry. One company that has successfully managed to take advantage of this gap is Airbnb. Alma Rita Jimenez, Undersecretary for Tourism Regulation, Coordination & Resource Generation of the Philippine Department of Tourism, mentioned that the Philippine Tourism Authority is currently looking for Airbnb and ecolodge-type developers in order to maintain “the face of the local community.”
2) Retailers and Developers Need to Develop Key Differentiators in this New Era
FGRT Senior Analyst Kiril Popov moderated a panel discussion titled “Experiential Retail: The Future of Retail?” The panelists, comprised of retail real estate developers, retailers and retail tech service providers, shared their views on how to enhance the customer experience in physical retail spaces in China and Hong Kong. Henry Cheng, CEO and Executive Director of Shanghai-based Chongbang Group, introduced the company’s “Life Hub” project, which encapsulates the concept that each project should have a retail component. Cheng believes shopping malls should be extensions of people’s homes and gave Life Hub @ Daning in Shanghai as an example of this. According to Cheng, the past five years have been an era of differentiation: quality and speed, which had previously been the key differentiators, no longer work, and so retail real estate developers need to create something different.
3) Retail Technology Is the Way to Make Offline Stores Always Online
Brands and retailers are constantly wanting to know more about their users to maximize their business opportunities and to go direct to consumer (D2C), according to Timothy Tsui, CEO and Cofounder of Fanswave, which has developed a business intelligence tool to help retailers and brands collect data via Wi-Fi. By engaging consumers through social media, brands can easily reach and track their consumer base to perform targeted marketing. These customer data can also help retailers understand the time of day or week consumers visit stores, where they go before and after, and what other stores they visit. These data can be used to create tailored, personalized advertising.
4) The Physical Store Will Never Disappear
The panelists unanimously agreed that the physical store is here to stay, notwithstanding the rise of e-commerce. Tsui of Fanswave believes that online and offline are inseparable, and that stores remain important for branding, loyalty, returns and customer service. Cheng of Chongbang Group also shared the opinion that online and offline go together. Ada Wong, CEO and CIO of Champion REIT, pointed out that returns will likely still need to be done at the physical store. Andrea Meoni, Head of Expansion Greater China at Calzedonia Group, described the lengths the brand goes to differentiate the shopping experience at physical stores, such as by ordering furniture from Italy, and referred to the challenge in China as finding the balance between online and offline.
5) Retailers Need to Localize Their Product Offering to Succeed in China
Retailers operating in China need to give Chinese consumers what they want. This was the key point that emerged from the panel discussion titled “Fast Retailing versus Luxury.” William Song, VP of Metersbonwe Fashion & Accessories, described how this homegrown Chinese casual wear brand strives to maintain its domination in China. To recover from its previous overemphasis on e-commerce and not having properly shifted channels, Metersbonwe now follows a strategy of launching new products and store experiences to match the brand. Localization is key in a country where weather trends and cultural differences exist across all the provinces. To this end, the brand has divided China into 30 markets, run by 30 different subsidiaries to separately analyze those products that are selling well in each area.
Similarly, clothing retailer Etam is another brand that deftly uses different channels, brands and product mix to appeal to local consumers. Etam, which initially began as a lingerie brand, utilizes department stores, physical stores and e-commerce such as Tmall, JD.com and Wanda’s FeiFan to reach Chinese consumers. To remain fresh in the minds of consumers, Etam has 24 seasons and uses the easy-to-care materials in its lingerie that Chinese consumers prefer.
6) Characteristics of Department Stores that Are Most Likely to Survive
Song of Metersbonwe stated that the department store model—i.e., the store as a franchisee of many brands—does well in areas with a highly concentrated population. In areas in China that are experiencing population diffusion, where people are moving out of the suburbs, the department store model is no longer as effective as it once was.
Michelle Lee, National Director of Operations and Development at Etam, lists the characteristics of department stores that will mostly likely survive as those that:
7) Entertainment Is the Ingredient to Sustain Traffic at Shopping Centers
In the panel discussion titled “Leisure and Entertainment: How to Develop and Sustain Traffic at Shopping Centers,” the panelists talked about the means they have used to create an enchanting customer journey for both the individual and the family.
Reinhart Viane, Business Development Director of KCC Entertainment Design, laid the groundwork by describing how consumers want experiences not just shopping at malls. Malls with an entertainment element average 10%–20% higher footfall.
Emerging trends in shopping mall entertainment touched on by the panelists included:
8) Digitalization Is the Solution to the Digital Revolution
Ronnie Chan, Chairman of Hang Lung Properties, presented on the topic “Excelling in Strengthening Partnerships with Retail Tenants,” outlining digitalization as the best way to address the digital revolution taking place in the retail real estate industry. He believes those retailers that will be least impacted by the digital revolution are those in the best locations and in the higher-end category. Although Chan expects shopping centers to become a different experience in the future, he does not believe that digital will replace the shopping center experience and in fact thinks that the bigger players will only get bigger. Hang Lung Properties implemented its EST initiative (Experience, Service, Technology) to accelerate digitalization.