As governments around the world try to contain the spread of coronavirus by closing their borders, implementing social distancing, and restricting the movement of people, physical events such as exhibitions and business conferences have been cancelled and global trade activities have declined sharply. Hong Kong businesses are facing unprecedented challenges.
Post-pandemic Strategies of Hong Kong Companies
From 1 June to 8 July, 2020, the HKTDC has successfully interviewed 100 Hong Kong companies from three broad categories, namely, consumer products (e.g. fashion apparel, electronics, gifts), consumer services (e.g. travel, personal finance, catering), and business services (e.g. financial services, creative industries, information technology). The survey aims to discover what challenges businesses in Hong Kong are facing in the current scenario and what they expect for the future.
The majority of respondents were of the view that they must adapt to this “new normal” by changing their business strategies. 38% of companies indicated that they are downsizing their businesses. Other proposed responses to the circumstances were 1) to strengthen digital presence (69% opted for “developing more online distribution channels” and 56% opted for “using more online marketing”), 2) to diversify into new markets (57%), and 3) to escalate technology adoption (47%).
Strengthening Digital Presence
There are two ways to strengthen a brand’s digital presence. One is to develop more online sales and distribution channels; the other is to target online marketing intelligently.
As Covid-19 restrictions made brick-and-mortar retail very difficult, online shopping became the primary means of commerce in the first and second quarter of 2020. In Hong Kong, total digital consumption continued to grow, with an 8% increase in visits and a 10% increase in total minutes spent online in March 2020. Global online shopping also experienced significant growth in the first half of 2020. Many traditional businesses have rushed to develop new digital channels to reach their customers rather than depending on the conventional sales and distribution channels such as wholesaling and retailing.
Businesses with an interest in online distribution can go different routes. Some businesses, such as Amazon and Netflix, exist only on the Internet. Other companies, such as Walmart and Ikea, prefer a blend of online and offline presence that delivers a cross-platform experience for the brand. In addition to conventional retail, online sales can include business-to-business (B2B) and business-to-consumer (B2C) transactions, such as eBay offers.
Using the Internet as a primary sales and distribution channel offers multiple advantages. Building a website is cheaper than opening a physical store, and online business owners can reach customers online anywhere in the world. Shopping is easy and comfortable for buyers. Perhaps the most enticing benefit is that businesses can capture data about their customers’ browsing and buying behaviours. Through data analytics, businesses can target customers’ tastes and preferences, customise their experience to increase conversion rates, encourage repeat purchases and build customer loyalty.
For some businesses in Hong Kong, online retailing is seen as an add-on sales channel to their “brick-and-mortar” shops. Online channels have proven to be critical while physical shops have been forced to shut down during the pandemic. Most respondents indicated that they intend to seriously consider new digital channels as a consequence of the devastating threat to their business posed by the pandemic crisis.