Why is Lorraine Lam waiting in line for two hours at a tony Hong Kong mall to buy the same Nutella spread that grocery stores sell for much less?
So she can get her friend's name on the label. Nutella's pop-up store in the Pacific Place centre is swamped with customers willing to spend $HK80 ($10) for a 350-gram (12-ounce) jar of the hazelnut confection with a personalised touch. The Ferrero SpA brand is selling almost 1,000 jars a day from its counter.
With retail sales in Hong Kong declining for 16 straight months, brands such as Nutella and Havaianas are capitalising on falling rents to open temporary outlets in some of the city's high-end shopping districts. At the same time, anchors such as Nike Inc are trying to generate more traffic by "popping up" in front of mall walkers with new or limited-edition products.
"Retailers are trying more aggressively to adjust to changing consumer demand by providing more 'special' and better-quality products," said Angel Young, managing director of market researcher Nielsen Hong Kong and Macau. "Pop-up stores bring new excitement to customers."
Malls like Pacific Place in Admiralty and Wharf Holdings Ltd's cavernous Harbour City in Kowloon long relied on a steady stream of mainland Chinese shoppers loading up on Louis Vuitton handbags and Cartier watches.
But now those high spenders are spurning Hong Kong in favour of Tokyo and Paris, while less well-heeled shoppers worry about China's decelerating economy and the city's social and political tensions, culminating in the violent Occupy protests. The number of mainland Chinese visitors to the city declined for a 13th straight month in June to 3.2 million, according to the Hong Kong Tourism Board.
That's triggering a decline in retail sales, which fell almost 11 per cent during the first six months of the year, according to the Hong Kong government. Sales in June fell 8.9 per cent, exceeding analysts' estimates.
To cushion the blow, commercial landlords are searching for new ways to generate foot traffic at the bevy of malls. They're giving space to brands that typically don't cater to high-end shoppers, and they're allowing brands already there to experiment.
"Pop-up stores offer freshness," said Kitty Choy, director of the retail business for Hysan Development Co. "The element of surprise keeps shoppers anticipating to discover: What is going to come next?"
The company's Hysan Place in tourist-mecca Causeway Bay has hosted pop-ups featuring the Nike, Kiehl's, Uniqlo and Nespresso names. Also, Lululemon Athletica Inc introduced Sunday morning yoga classes in the public space to generate buzz for its store.
Nike set up a miniature basketball court that also showcases its sneakers. The company uses pop-up retail around the world to offer unique products, analyse customers' running styles and support promotional tours by endorsers such as NBA superstar Kevin Durant.
© Bloomberg
