Next-generation retail must target local market, introduce new services

Oliver Tong

Oliver Tong, associate director of retail properties at Jones Lang LaSalle (JLL), said yesterday that ‘next-generation’ retail in Macau should target the local market over the tourist sector. He added that it should strive to introduce value-adding services that differentiate between online and in-store shopping experiences.
Tong made the comments during a presentation at a business luncheon, in which he summarized the health of the retail market. The event was co-organized by the British Business Association of Macau and the American Chamber of Commerce in Macau, both of which are celebrating their tenth anniversaries this year.
Evaluating the state of the industry, the JLL associate director claimed that total retail sales in Macau had dropped 10 percent in the first three quarters of 2015, compared with sales in the same period of 2014.
Luxury goods fared predictably worse, plunging 25 percent, as the drop in consumer traffic, instigated by President Xi’s anti-
corruption drive on the mainland, continues to slash demand.
However, not all retailers are doing badly, Tong said. He echoed JLL’s predictions from last year’s annual forecast, by saying that cosmetics, fast fashion and sportswear had all continued to perform strongly in 2015.
His solution to reversing the downward trend is to develop value-adding services to physical shopping locations that would help to differentiate stores from their online competitors. Tong posits that the retail sector needs to consider the question: “What can they do offline that they cannot do online?”
Services like free Wi-Fi, customer lockers and umbrella stands are all very popular in Hong Kong and other major shopping destinations, because they add convenience to the shopping experience.
The umbrella stands are an interesting example, he says. Customers initially pay a refundable deposit in return for use of the umbrella, but they “must return to the shop or shopping mall to return the umbrella, making it more likely that they will spend more.”
“The research shows that these [services] make people come back more, spend more time in the shop, and spend more money,” added Tong.
JLL also revealed that, according to data released by the Statistics and Census Service (DSEC), only 40.1 percent of total retail spending in the MSAR comes from the approximately 30 million visitors to Macau each year. The majority surprisingly stems from a local population of just 636,000, as recorded at the end of 2014.
JLL added that the Macau retail sector is missing an opportunity by continuing to focus on tourism, and neglecting the local promotion of their products.
At a press conference at JLL’s headquarters last week, the associate director told the Times that casino operators are in the early stages of targeting the local market, but that little progress has been made thus far.
Additionally, the untapped local opportunity is set to continue growing. According to DSEC, the medium income of Macau residents has consistently risen over the last 12 years. Today, local people are the wealthiest they have ever been in absolute terms, with the medium income reaching MOP15,000 as of the third quarter of 2015. Staff reporter

giant rubber duck on its way

On the sidelines of the BBAM business luncheon at the Mandarin Oriental yesterday, Oliver Tong of Jones Lang LaSalle (JLL) publicized the planned arrival of a giant rubber duck in Macau. The giant inflatable duck will arrive in April and will be located near the Science Center in the NAPE area. The JLL associate director said that creative installations such as the giant duck can create a positive impact on nearby retailers, citing the effect the project has had in other locations it has visited.  Tong added that the installation could help to drive locals and tourists to visit the area.