Recent social unrest and the COVID-19 pandemic have accelerated the emergence of a new "stay-at-home economy" for groceries and fresh produce in Hong Kong.
In the first half of 2020, sales from supermarkets, livestock, poultry and frozen products experienced double digit year-on-year growth, while overall retail sales declined by over 33% compared with 2019 (Source: Census and Statistics Department).
In Hong Kong, close proximity between supermarkets and retail outlets with residential estates has traditionally limited the demand for online grocery shopping. However, since the implementation of social distancing measures and flexible work arrangements, a substantial part of retail sales, including groceries, is now being conducted online. In order to capitalise on this consumer shift, grocery retailers had two choices: either invest heavily to expand their own digital platforms and build a logistics network from the ground-up, or form new partnerships with existing service providers to increase their online capability in a much shorter time frame.
We have therefore seen numerous new partnerships pop up, including between retail giants such as M&S Foods and 7-Eleven, who have partnered with online delivery platforms Deliveroo and Foodpanda to offer on-demand grocery delivery. Many grocery stores and supermarkets have also signed up to Foodpanda's new "Foodpanda Mall", giving them immediate access to the benefits of an established online platform. With an existing distribution infrastructure including thousands of couriers on standby, on-demand services such as Deliveroo and Foodpanda serve as attractive partners for traditional retailers and are likely to continue to be in demand.
This article was written as part of RPC's Retail Compass Spring edition 2021.
Originally published March 25, 2021
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