Retailers should refocus on experiential retail amid uncertainties: PwC

More Chinese retailers are moving to integrate experience-driven retail and adopt unconventional retail tactics like 'coopetition' (cooperation with competitors) amid uncertainties and slowing economic growth, according to a new report from PwC.

“As consumer sentiments and the actual consumption expenditures are dragged down by the prolonged US-China trade war and its ripple effects on financial markets, we estimate Hong Kong’s retail sales to drop by 5% to HK$460 billion (US$59 billion) in 2019,” Michael Cheng, Asia Pacific & Hong Kong/China consumer markets leader for PwC, told a press briefing on Wednesday.

Cheng said Hong Kong’s retail sales, as well as mainland tourist arrivals, would likely continue to drop through the rest of 2019, indicating the city’s consumption sector is decelerating.

“We see the electronic-products and luxury-goods sales may further contract, while large-scale production goods such as healthcare and cosmetics may increase slightly,” he added.

Like Hong Kong, the situation also isn’t optimistic for mainland brands and retailers, with 2018 retail sales growth slowing to a 15-year low of 9%.

Encountering the challenge ahead, retailers across Hong Kong and the mainland are moving to create experience-driven 'retailtainment' experiences to build an engaging shopping journey, according to PwC's report, titled 'Back to The Core: Reinvigorate Experience-driven Retail at a Time of Uncertainty'. 

A recent Chanel pop-up in Hong Kong, the Coco Flash Club, represents one recent example of this trend.  

PwC also predicts that “coopetition” is set to rise in Hong Kong’s retail landscape.

The report is based on data from the consulting firm’s Global Consumer Insights Survey 2019: China Report.

Chinese consumers are evolving, Phil Lai, consulting partner of PwC China, said at the same conference. “They are adopting a ‘mobile-first’ purchasing behavior as part of their everyday lives and they’re upgrading their purchases by spending more on non-necessities and luxuries, among other trends,” he noted.

To maximise return on experience (ROX), Lai said brands and retailers should fuse customer experience across the entire value chain, monetise discrete moments, build communities with a purpose, and be digitally agile and data-driven using new technologies.

ROX should be used as a roadmap to plan, execute, and measure experience-driven tactics to gain a frictionless customer journey and greater customer satisfaction, Lai said.