Saturday March 27, Photo Essay (Bowen, Cabrera, Cahill)

Saturday March 27, 2010
Mandy Bowen, Jessica Cabrera, Kristin Cahill


Retail Landscape:


In Hong Kong, shopping is a religion and national pastime – even more than in the United States. The malls in Hong Kong are multiple levels and much bigger than the malls in the United States. The malls offer all kinds of stores and services, including grocery stores. The malls create a very convenient, one-stop shopping experience. From our tours in the various malls, it looked like almost every store was selling high fashion, luxury goods. Some of the stores we toured in the mall were under the Trinity brand owned by Li & Fung. These stores offered high end menswear.

We also toured a Toys R Us in the mall. We aren’t used to seeing this store in a mall, but it makes a lot of sense because there isn’t much land available to build free standing stores. The mall provides much more foot traffic for a store like Toys R Us. The Toys R Us provided many opportunities for kids and parents to be interactive with the toys, which probably facilitates many sales. The stores have to have a different business model than the Toys R Us stores in the U.S. because of the different scale. The Toys R Us in Hong Kong are all about “creating wow” for children. Li & Fung implemented a very successful CRM program called the Star Card program. This reward program drives 50-60% of sales and has 2.1 million members. It provides a unique and powerful database and it’s a critical part of their marketing. The CRM program leads to many targeting and customization opportunities.

Overall, the retail market in Hong Kong seems to be booming. There is still room for growth, especially for Li & Fung. It will be exciting to follow Li & Fung into the future now that they have entered into the expanding beauty market and continue to grow their business through various acquisitions.


Business Observations:

At the Li & Fung offices today we got presentations on LF retailing and a background on their Trinity stores that they have here in China by Louisa Kwan(right). The biggest point that they made was that you have to have focus in your business; you can’t be in too many places at one time. I think this is a good thing to remember when you are a big business that is expanding every day.

Argha Sen also presented on Toys R Us in China and explained their very successful loyalty program called the Star Card program. This reward program drives 50-60% of sales and has 2.1 million members. It provides a unique and powerful database and it’s a critical part of their marketing. The CRM program leads to many targeting and customization opportunities. This loyalty programs doesn’t just include the normal coupons but offers member days, fun bonuses, a birthday program, priority tickets and even personalized emails to their loyal members. Sen also kept reminding us that they followed the KISS (Keep It Simple Stupid) way to be successful. It was great to see that doing things in a simple way can lead to greater success. These presentations were very eye opening on how business is done overseas. I think that we can definitely learn from Li &Fung’s successes to bring better business practices back to the US.

Sen presenting about Toys R Us Asia.

Cultural Observations

Our morning was spent learning about some of the retailing aspects of Li & Fung’s business which also opened our eyes to some of the cultural adaptations that are made in the Asian markets. As mentioned previously, shopping is a national past time in Hong Kong. Culturally, status is a very important part of the consumer’s decision making process. Wearing designer clothes, handbags, and driving nice cars are important to consumers to show their status. Even families with small children make weekly trips to Toys R Us and are constantly searching for the best new toys that can “Wow” them. This was an interesting cultural observation because although in the US there is still an emphasis on status it is nothing like in Hong Kong. Everywhere you look there are Mercedes, Gucci bags, and little kids in Burberry. These things may seem excessive but they are a very important indicator of success and wealth in Hong Kong.

After our morning at Li & Fung, the afternoon was free to try our luck at bargaining at the markets. After a morning at an upscale mall it was interesting to see the other side of the retail market in Hong Kong. Although these markets are aimed at tourists it is amazing to see the different aspects of retail within the city. Another small cultural observation is that McDonald's delivers! In such a large city, almost every delivery driver we saw drove a motorcyle with a spot for the food on the back. Even across the world, people appreciate their McDonalds! Overall, the trip has given us amazing opportunities to see the differences between our retail, business, and cultural observations but it has also given us a chance to appreciate the similarities as well!