Over the last three decades, Lan Kwai Fong Group has established itself as a household name in Asia. With an extensive portfolio of brands, properties and investments, from F&B, retail, to leisure and entertainment, LKF is highly regarded as the foremost entertainment, hospitality and lifestyle group in the region.
In these difficult times, LKF Group’s businesses, being those heavily dependent on tourism, have been deeply impacted by the COVID-19 crisis, and we wanted to know more more about how such a group is currently operating and what is the outlook for the coming months.
Retail in Asia had the pleasure to meet Allan Zeman, Chairman of LKF Group, and prominent figure in the HK scenery sitting on various government committees, boards and advisory bodies.
Our conversation focused on how to reinvent business during the crisis in a city like Hong Kong, heavily dependent on inbound tourism.
RiA: LKF Group has a wide portfolio of brands and somehow they are all interdependent. How can they successfully leverage on each other in Hong Kong and more broadly in Asia?
LKF Group is a lifestyle brand and we aim at building a whole world rather than focusing on one sector only. Consumers are constantly changing and so are we, adapting our offer to remain relevant to them.
Young generations in particular are exposed to global influences so we need to monitor changes to respond quickly with new offerings.
Hong Kong, like any other place in the world, is very much exposed to both Western and Eastern influences that here find their place to co-exist. Hong Kong people change their taste fast and businesses have to quickly adjust and follow, or better predict.
Lifestyle is all about what’s new and how you can embrace it in different forms, that is why it is fun. It leaves room for creativity.
RiA: Regarding your real estate investments, we have seen how brand mix within retail properties has shifted towards a more lifestyle-oriented allocation of the space. How do you see it evolving in the future?
It has been a while property developers have been looking for a winning formula to create a destination for consumers. The recent shift is more towards 30% F&B, 30% entertainment, and 40% retail.
LKF Group, working across different sectors, understands the difficulties of its tenants and we are working together to keep business going as we are all in the same boat. Volar, for instance, after 19 years in the same venue in LKF was no longer able to sustain its high rent, so we found a way to offer the iconic club the rooftop of California Tower to maintain its legacy.
The same building is home to PURE and several F&B concepts bringing customers from one side of the world to another through a journey of flavours. This makes the California Tower, not a simple property, but a lifestyle destination where you can spend your time across different activities, from gym to lunch, from dinner time to clubbing.
Hong Kong offers a variety of choices for people willing to go out, and more or less, all of us do. During this crisis, we have seen businesses such us Deliveroo and foodpanda getting more and more traction because of social distancing measures, but going to a restaurant is not about food, it is an experience, a gathering, an exchange.
Places like Ocean Park also play a key role in Hong Kong entertainment and that’s why they need to work on revamping the idea of fun and use AR and VR to provide immersive experiences and attract different demographics. World is changing, so are consumers, and so have to do businesses.
Trends come from the streets, from places where consumers live, they are not a top down imposition, when we talk about being customer-centric, it means to understand what they want and deliver new experience in a unique way.
Recently, we have opened Aria, a new Italian restaurant in the heart of LKF, at the California Tower. The menu offers guests an experience designed by an Italian chef, given that international travelling is paused for a while, customers will be able to taste local delicacies from the country of La Dolce Vita.
RiA: The COVID-19 crisis is bringing up socio-economic issues which were already present in different markets worldwide. How do you see Asia changing and at which level?
Looking at the global situation, it seems that Western countries have been trying to find this balance and sometimes privileging the idea that we will have to co-exist with the virus and try to carry on with our life limiting travels and personal interactions, but still save economies already hit by lockdowns.
In the Eastern side of the world instead, governments have prioritized preserving the health of citizens, isolating areas and sometimes disregarding businesses’ needs. This makes cities like Hong Kong, one of the safest places in the world at the moment, but with discontent among businesses that are forced to shut down and lay off people.
All the world agrees that Asia will be recovering quicker than other continents for several reasons, we started first, but also countries here function at a faster pace and businesses are more agile.
RiA: Hong Kong is a city whose economy is mainly based on tourists, do you see any opportunity to re-focus on local consumption and make economic relationships more financially sustainable?
Hong Kong has a great brad mix across categories that makes it an international retail hub. Before the recent social distancing measures, sectors such as F&B benefited from the fact Hong Kongers were spending locally given the impossibility to travel. In Summer, expats usually spend holidays in their home countries, this year, most of them will stay in HK.
COVID-19 is a global crisis, it caused disruption in the world, with airlines and tourism industry business suffering the most. Business in Hong Kong heavily depends on inbound travelling but at the moment China’s only goal is to control the pandemic so Chinese will only travel in Mainland for some time.
Hong Kong has the chance to re-focus on local consumers, even though they will not be able to sustain the structure put in place for the numbers generated by tourists. The future of Hong Kong is the Greater Bay Area.
Vaccine is the solution, but we still have some time to go. Businesses need to reinvent themselves. It is time for fashion to focus on lounge wear as comfort, labels seem not to be relevant anymore yet people want to build a social status through what they wear. All businesses need to accelerate their digital transformation and stores will be more showrooms than transactional places.
RiA: F&B is quite an interesting sector in HK, with up and coming concepts trying to satisfy local community taste. Any specific emerging trends?
In Hong Kong, F&B scenery is quite diverse. You have any cuisine you want and concepts keep rotating to satisfy new palates. Before the pandemic, we could see a rising interest into lounge bars and club and we could see that people were more interested in spending money on drinks more than food.
We will see how it evolves, but HK will still be an eating paradise.
RiA: The current situation globally gives us the opportunity to re-think our businesses and lives. What is your personal stance? Do you see ways of turning this crisis into an opportunity and how, or will we just be back to normal in 3-4 years?
COVID-19 has changed people’s priorities. Safe is the new black. I think it is going to change some aspects of our life forever like travelling. Before 9/11 security procedures were different, that event changed them forever. COVID-19 will leave a mark on some procedures and habits.