2017/12/19

Physical Retail Will Flourish in Comparison with E-commerce

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In recent years, electronic commerce has developed rapidly, and all kinds of B2B websites emerge endlessly, making the real economy suffer a blow. Although brick-and-mortar retailers have felt the impact of robust online buying, the in-store shopping experience remains dominant in the retail sector, and online and offline retailing can coexist and cooperate.
"E-commerce indeed has made its strong impact towards physical retail, but brick-and-mortar stores are irreplaceable and continuing taking the lion's share of retail sector," said Victor Cha, who also serves as deputy chairman of HKR International.
According to data issued by the Ministry of Commerce, China's online retail sales of physical goods totaled 4.19 trillion yuan ($633.5 billion) in 2016, up by 25.6 percent year-on-year but still accounting for only 12.6 percent of the retail value of all consumer goods purchased.
Similarly, financial research firm Gordon Haskett said in a recent survey that apart from music, books, movies and small appliances, consumers showed a preference for in-store purchases, especially for experienced-based categories such as groceries, household, health and beauty, pets and automotive products.
"Shopping malls are no longer a place purely for shopping, but a one-stop experience provider for shopping, lifestyle and social ... Retailers have to either embrace this trend peacefully or be phased out," Cha said.
In order to stand out from the high homogeneity of shopping malls' brands, HKRI Taikoo Hui mall did not introduce top luxury brands such as Louis Vuitton or Gucci.
Among the approximately 250 diversified brands in the mall, eight had their China debut stores, 22 were opening their first outlet in Shanghai, and 15 are special concept stores, Cha said.
The HKRI Taikoo Hui is also the location of the newly opened Starbucks Reserve Roastery in China, the only such Starbucks of its kind except for Seattle, also home to the company's headquarters.
When more internet retailers such as Alibaba and JD go offline and open physical stores with their advantages in capital and big data resources, traditional retail operators should adopt state-of-the-art technologies to become competitive, according to Cha.
In the past 15 years, HKR International has made a total investment of about 20 billion yuan into the Chinese mainland, accounting for nearly half of the company's total investment during the period.
"Our weighing in the Chinese mainland, especially in the Yangtze River Delta region, will continue to grow, as we are a Chinese company, and we will continuously look for real estate investment opportunities both in residential and commercial sectors, in line with the central government's policies and strategies," Cha said.
"The Chinese people in the past two decades have generated abundant wealth; in regards to their strong attachment in buying property, high-quality residential property will continue to be sought after by the expanding middle class, and that is what we were doing for the past four decades and will continue to do in the coming four decades."
Thus, it can be seen that in the face of the violent offensive of e-commerce, the real economy must avoid homogeneity and develop its own characteristics in an invincible position. 

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