Hongkongers have always embraced technology as a part of customer experience, and their appetite for cross-channel, flexible shopping experiences has increased through the pandemic. Adyen, a global payment platform, released the findings of the Adyen Hong Kong Retail Report 2022, highlighting how a unified cross-channel experience addresses the demand for seamless experiences and increases loyalty, average spend, and growth.
The research report is based on insights from 40,020 consumers from 26 markets and 11,530 merchants across 23 markets, including 1,002 consumers and 500 merchants in Hong Kong.
“Hongkongers can’t wait for life to go back to normal. We are all eager to shop in stores, but we are all a little more selective about how we part with our money. With Hong Kong being a renowned ‘shoppers’ paradise’, consumers naturally have high expectations, particularly on technology-enriched seamless experiences,” said Kai Tang, Head of Hong Kong, Adyen. “Businesses are realizing this as a growth opportunity, with 99 percent planning to invest in digital technologies in the coming year.”
Hong Kong businesses made good use of the downtime to invest in digital technologies. With cashless remaining king, 23 percent of businesses connected payments to other parts of the organization. As a result, 46 percent feel their organisation is now in a better position.
Hong Kong businesses that have a connected payments system can obtain a single view of shopper data from transactions across all channels, benefitting their business decision making and driving growth. 70 percent of merchants who connected their payment systems across the business grew by 20 percent or more in 2021, and 78 percent of them expect to achieve the same growth in 2022.
Customer experience matters for Hongkongers
Hong Kong shoppers highly value good and flexible shopping experience, according to the report. The majority of Hongkongers (78 precent) will not shop with the same merchant again after a bad shopping experience, either online or in-store.
With the accelerated shift to online shopping, more than half (59 percent) of Hong Kong consumers said they have used shopping apps more during the pandemic than they did previously. This has raised their expectations on online shopping experience – 33 percent of interviewees said they are less tolerant of poor online experiences, higher than the Asia Pacific (APAC) average of 27 percent. A majority of them (61 percent) also said if retailers can sell across multiple channels during the pandemic, they should adopt the same, flexible approach normally.
Physical stores remain an important touchpoint
Despite the rise of ecommerce, most Hong Kong consumers (63 percent) still prefer to shop in a physical store, a consistent trend compared with 2020 (66 percent). With certain levels of Covid restrictions in place for the past few years, 40 percent of shoppers have a new appreciation for being able to touch, feel, or physically try products before buying. To almost two-thirds of Hongkongers (67 percent), shopping online is just for convenience, and they will still shop in physical stores for pleasure.
Hong Kong merchants are generally hopeful about the recovery of physical shopping in 2022 – 42 percent of businesses in Hong Kong expect the proportion of revenue from physical stores to increase in the next year.
With convenient access to products via online channels, Hong Kong shoppers are expecting more from their in-store experience, with technology being an important differentiator – 70 percent are more likely to shop with those that use technology, such as new ways to pay, to improve the shopping experience.
Similarly, consumers expect retailers to integrate technology to enhance their cross-channel experience. However, there is currently a mismatch between what consumers expect and what retailers are offering – 65 percent of Hongkongers would be more loyal to a retailer that lets them buy things online and return in store, but only one-fifth of retailers are allowing that. Furthermore, only 1 in 4 Hong Kong businesses enable customers to shop and complete transactions easily across online and offline channels.
In fact, businesses that consistently perform the best are those that can combine their physical and digital worlds to create a fluid, channel-agnostic experience which prioritizes the customer. This is unified commerce, the next level up from omnichannel sales, and is proven to be key to success – 65 percent of Hong Kong merchants that enable customers to shop and complete transactions easily across online and offline channels grew by 20 percent or more in 2021.
Those who embraced unified commerce were able to enjoy multiple benefits, including improved customer experience (42 percent), increased sales (44 percent), increased customer loyalty (44 percent), and higher average spend (34 percent).
A key part of unified commerce is a connected payments system. Payments data, in general, provide useful insights on customer preferences and help merchants make informed business decisions, supporting their business growth. In Hong Kong, however, this data is not utilized to its full extent. Less than one-third of merchants use payments data to understand user behaviour and improve customer experience (29 percent), guide product development (27 percent), guide inventory (25 percent) or drive personalised marketing campaigns (26percent).
“We believe digital transformation will continue opening up a wealth of opportunities. 73 percent of Hong Kong businesses expect to grow by 20 percent or more in 2022, and hitting these growth ambitions equates to a HKD 218 billion (USD 27.78 billion) opportunity,” Kai added. “If technological adoption is accelerated, the local retail sector could add an additional 8.8 percentage points to its total growth rate over the next five years – this growth potential is the highest in Hong Kong compared to all markets included in the research.”
Businesses are optimistic about the future, and so they should be. Consumers continue to drive innovation and flexibility and businesses are expected to not only keep up, but continue to shape whatever comes next.