Earlier this year, Harvey Nichols reopened its store at Pacific Place launching a new retail concept aimed at engaging the younger generations of consumers and blend offline and online experience together.
Retail in Asia had the pleasure to interview Pearson Poon, Executive Director of Dickson Concepts (International) Limited and Harvey Nichols, the young leader who led the launch of the new retail concept for Harvey Nichols in Pacific Place, Hong Kong. Being part of the new generations of consumers, Pearson’s objective is to target the youngest with their own tools, that more and more often are online.
RiA: What are the elements that characterize this new retail concept?
Pearson: Our new retail format store had its grand opening on September 26, and this is our first new retail format store globally for Harvey Nichols and is the first store that optimizes the synergies between our offline and online channels.
I am sure you know very well, most department stores at the moment, of course, have their own e-commerce website, but they also have their physical stores. Normally the products offered between online and offline are the same. For us, if you look at our online and offline products, the product overlap is less than 10%.
In our new store, leveraging both interactive digital displays and traditional physical display units, we show both of our online and physical products within one space. We can therefore half our physical space requirement, but increase the number of products we can offer to our customers by three times. As a result of that, there are several effects.
First of all, fixed costs will come down a lot because with the physical space halving, the rental costs will also decrease accordingly. At the same time, the number of staff and other operating expenses will also decrease. However, because we are offering customers so much more choice in terms of product selection, we expect sales density to increase, and all of this will contribute to a more profitable model over all. But equally as important, through our new store model we really hope to give customers a completely differentiated shopping experience that we believe is not available anywhere else in Hong Kong. We think this is also very important in the retail environment of today.
RiA: Why did you pick Hong Kong to launch the first new concept globally and not UK?
Pearson: In terms of our online platform, the products offered actually come from our UK hub, so say we were to launch this in the UK, our online products and store products would be quite similar, and as such the concept would not work in the same way. Whereas in Hong Kong, if you were to look at our physical stores, we focus a lot on new and emerging designers and interesting brands from Japan or Korea for instance.
Given this, our online offer which focuses on major brands is very complementary to our Hong Kong local offering, which when combined provides a very interesting and comprehensive product offer to our customers.
RiA: Since you belong to this new generation of consumers, how do you envision the future and in which way you kind of made your first contribution to it?
Pearson: Today, customers are increasingly shopping across different channels. So we wanted to come up with a retail format that appeals to that customer group.
In our new store, we launched our first interactive shop display window, such that we can engage customers even before they walk into the store. The interactive window is composed of multiple digital displays where customers can explore and mix and match our online products prior to entering the store.
We expect a lot of traffic passing by the store and we hope that through this we can engage our customers and also provide a shop window to our online offering in a way that is fun and interactive.
RiA: What would people be able to see on the shopping window digital displays in terms of products and apart from this, what are the other focuses of the store?
Pearson: The interactive window will show products from our online offer and for customers hoping to learn more about our products, via QR codes we also provide additional information regarding the products such as fabric composition, sizing, etc. In terms of other focuses for the store, we think that in today’s world of luxury retail, the service side is key to provide a distinctive experience. Traditionally in a Harvey Nichols store, we would always have a personal shopping department, where our VIPs can come in and enjoy styling services. However, many younger customers feel a bit intimidated by this environment and mistakenly feel that by entering the personal shopping space they have the pressure to spend.
As such, apart from having the traditional personal shopping department, as part of the new store we also launched an online style lounge that was specifically built, as an open format space. As a result, any customer browsing the store will feel very welcome to walk into the lounge and enjoy our services
The idea of the lounge is that customers can be served by our online stylists who will be able to walk them through our entire online offer and provide product and outfit recommendations across the online and store offer. Customers can then complete their physical store and online purchases in one go.
So as you can see, we want to focus on personalized service, but to also ensure that this is accessible to all of our customers, whether they are long-time VIPs or first-time customers.
RiA: As you have this strong focus on new generation of customers, does it have any impact on the selection of brands that you do both online and offline as it changes throughout time? How is it very specific in Asia?
Pearson: In terms of the selection of brands, it ultimately has to fit into multiple criteria that we have such as alignment with the brand ethos of Harvey Nichols, whose mission is to find the most innovative and exciting brands for our customers. When we say “the most exciting,” this can refer to a major international designer like Valentino, which has been with us for many years but has continued to innovate and bring newness as a brand. It can also refer to exclusive new designer’ brands emerging from Japan and Korea for instance that we see significant potential in. It is a big focus for us to unearth new designer brands such that customers can continually discover the newest and most exciting products on market at Harvey Nichols. For our Hong Kong physical store, we then of course tailor the selection based on the tastes, fit, and preferences of the Asian customer, which does differ from the UK customer for instance.
The idea is to launch this new retail concept in Hong Kong, continue to experiment with it, and refine the experience through customers’ feedback. We will then evaluate as to whether this concept will also work in mainland China for instance, where we are yet to have stores at the moment.
Other markets such as Japan could also be of interest, but finding the right location will be key. Ultimately, the focus for us is to get this format refined and optimized as much as possible, and then look at the expansion opportunities.
RiA : What’s the plan for the online?
Pearson: Currently, we ship worldwide to more than 200 countries globally, and one of our focuses at the moment is to provide great service to our customers around the world, which they have come to expect from shopping at our physical stores. We are the first luxury department store in the UK to offer instant messaging, photo sharing, and live streaming on our online platform, such that customers even when shopping online at home can connect with our stylists in store to get completely personalized advice.
This enables us to offer service online that is completely consistent with what we offer in our physical stores, thereby allowing customers to have the same great experience whether they are shopping online or offline.