Hong Kong Retail and F&B Feel the Chill as Residents Go North

Hong Kong’s retail and F&B sectors are facing a new challenge: the allure of Shenzhen for Hong Kong residents. Since the lift of cross-border travel restrictions last year, a wave of northbound travel is impacting Hong Kong businesses. Hongkongers are increasingly drawn to Shenzhen for weekend entertainment and shopping, leaving Hong Kong’s once-thriving consumer scene with a question mark.

This shift in consumer behaviour is driven by several factors. Shenzhen’s booming retail sector offers a wider variety of brands and experiences, often at competitive prices. Additionally, improved transport links like the high-speed rail and the convenience of cross-border mobile payments have made visiting Shenzhen a breeze for Hongkongers. The impact is evident as high-end malls and restaurants in Hong Kong report a decline in footfall and spending. Local businesses, already struggling with pandemic recovery, face a new hurdle: maintaining its relevance in the Greater Bay Area and the wider regional market as a retail and F&B hub in the face of a growing and dynamic mainland market.

So, what’s the outlook? While the immediate future may be bumpy, there’s room for optimism. Hong Kong’s unique strengths – its international flair, brand reputation, and efficient service – remain valuable assets. The city’s F&B scene, known for its innovative spirit and diverse offerings, can still attract customers seeking a distinct dining experience.

However, to adapt, Hong Kong’s retailers and restaurateurs need to strategise. Here are some ways they can compete:

• Focus on Experience: While price is a major factor (and it is a fact that Hong Kong is high-cost city), Hongkongers still value unique experiences. Retailers should elevate with interactive experiences, workshops, and events to create a more engaging atmosphere. Restaurants can offer special tasting menus and themed dining experiences that introduce the unique east-meets-west Hong Kong culinary culture to tourists to set themselves apart.
• Elevate Customer Service: While Hongkongers are drawn to Shenzhen for better value for money, local businesses should ensure their staff are well-trained, and knowledgeable, and provide a personalised touch that exceeds what customers might find in Shenzhen.
• Embrace Omnichannel Retail: Consumers today expect a seamless shopping experience across online and physical stores. Hong Kong businesses can leverage technology to offer online shopping with convenient delivery options, click-and-collect services, and loyalty programmes that integrate online and offline purchases.
• Target Specific Customer Segments:  Not all Hongkongers are flocking to Shenzhen, for those who spend their weekends in Hong Kong, tailor your product and service offerings to their needs. Consider loyalty programmes and targeted marketing campaigns for specific demographics or interests.

The current situation presents an opportunity for innovation. By catering to a more experience-driven clientele and embracing omnichannel strategies, Hong Kong’s retail and F&B sectors can carve out a niche and thrive alongside the growing giant of Shenzhen, catering to both local residents and visitors.