Behind the bright facades of their shop windows, there is a darkening gloom enveloping Hong Kong retailers. And it's no wonder: August 2016 was the 16th consecutive month of declining sales in the sector.
It is widely reported that Mainland Chinese travellers have spent less. At the same time, according to research by Nielsen, 88% of Hong Kong consumers shopped online in the 12 months preceding March 2016.
Of course, this doesn't spell doom for the physical retail space. People will always go out, and will always be tempted by what they see in a real shop window. Many will simply prefer the experience of visiting a physical shop and 'trying before buying'.
But it is undeniable that the sheer convenience of online shopping has made a dent in the traditional retail model. Its impact will only deepen in the foreseeable future, until some kind of new balance is reached in the sector. In the meantime, there will be many casualties.
Making bricks-and-mortar 'smarter'
However, there are ways for bricks-and-mortar retailers to fight back. One idea was advanced by Li and Fung in their white paper The Disruptors Series: Robots as Store Associates: "Customers expect to complete their shopping journeys quickly and efficiently, so in these instances, robots or kiosks would be able to deliver more effectively."
The concept of Artificial Intelligence (AI) in the bricks-and-mortar shop could create something completely new, combining the most attractive strengths of both retail models. Strategically placed kiosks, for example, could offer customers the enhanced access to product information, product comparison, and fuss-free product search abilities they have come to expect from online retailers – but in a setting that also allows them to 'try before they buy', and enjoy the instant gratification of taking their purchase away with them rather than waiting for delivery.
AI could also mimic online retailers such as Amazon by 'learning' individual customer habits, and then offering personalised product suggestions on subsequent visits. Data provided by the customer to the 'robot shop assistant' would also help the retailer to monitor stock, extrapolate future demand, respond to customer concerns, and further tailor the experience more closely to their expectations.
Trailblazing the 'robot shop assistant'
In-shop AI isn't a totally unproven concept either, at least outside of Hong Kong. In Japan, both the Mitsubishi department store and Toshiba have already 'employed' Aiko Chihira, a humanoid robot, in customer service. The robot has proved quite effective in such tasks as giving directions and promoting in-store marketing campaigns.
In the USA, retailing giant Macy's has taken another tack on in-store AI with a mobile app that transforms customers' phones into shop assistants. Their 'mobile shopping companion' even personalises itself by learning user buying habits over time.
These are only two approaches to the same goal of creating a 'physical online experience', but both offer at least a good possibility of disrupting the juggernaut of online shopping. For Hong Kong retailers, sooner or later, it may be worth a try.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Hongkong Business. The author was not remunerated for this article.
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Lawrence Chia is the Chairman and CEO of the Hong Kong-listed Pico Far East Holdings (Pico Group) (SEHK: 752).