About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
Save As PDF Print this page
Qzone

Hong Kong Traders Must Adapt to Thrifty Consumers
New HKTDC Report Spotlights Emerging Market Trends

13 May 2009 – As tough economic conditions change consumer behaviour, Hong Kong traders must respond with products that appeal to bargain shoppers and to buyers who tend to stay at home, according to new research by the Hong Kong Trade Development Council (HKTDC).

The report, "Changes in Consumer Behaviour in Traditional Markets," underscores how the global economic downturn has altered the lifestyles and buying preferences of consumers in the United States, the European Union and other regions considered Hong Kong's traditional export markets.

The HKTDC report, which includes data from two previous US economic recessions, in 1990-1991 and 2001-2002, predicts that today's consumers will spend more time at home and dine out less. The study also notes a consumer shift from consumption to savings, creating an appetite for goods with the best mix of low price and high quality.

"If Hong Kong traders look to maintain their market share in traditional markets, they should introduce suitable products aligned with new consumer behaviour and implement appropriate marketing strategies," said HKTDC Assistant Chief Economist Daniel Poon, principal author of the report.

Mr Poon advised exporters to work with supermarkets and discounters to strengthen supply chain management, a move that should help meet the needs of low-cost retailers for prompt and flexible delivery. He also reminded traders that price-conscious consumers remain concerned about quality. Hong Kong producers must ensure that they meet safety standards. They should also offer such incentives as extended warranties and after-sales service to help distinguish Hong Kong products from low-cost goods manufactured elsewhere in Asia, he said.

The research report also indicated that private labels are becoming more attractive than national brands. Mr Poon said that price battles could emerge as traditional markets are flooded with private labels, and buyers increasingly shop retail outlets for the best deals. The trend could favour supermarket and discount stores such as Wal-Mart in the US and Tesco in the UK, rather than department and luxury stores.

"Business opportunities stem from the prevalence of private labels. Since Hong Kong manufacturers have a good knowledge of OEM and ODM, they can use their experience to supply private labels according to retailer choice," Mr Poon added.

The HKTDC report identified several categories with greater market potential:

HDTVs and Set-top Boxes: During the recession in the early 1990s, the sales and penetration rate of video recorders increased in the UK. Current demand for in-home entertainment should boost sales of high-definition TVs and set-top boxes.

Video Games and Related Software: Sales of electronic games remained strong, despite the 2001 US recession. The HKTDC research report gives an upbeat outlook for the sales performance of electronic game consoles and software.

Toys: Despite the economic pinch, parents remain willing to spend money on their children. The report predicts increased market demand for toys, especially those for educational purposes.

Frozen Meat, Dairy Products and Packaged Food: Research indicating that US consumers will cut spending on restaurants and fast-food outlets implies that food prepared at home will be in greater demand.

Kitchenware: Home-cooked meals are likely to boost spending on appliances, including low-fat cookers and other devices seen as encouraging good health. More home dinner parties should also drive demand for tabletop items, including cutlery and glasses.

DIY Home Renovation Products: Increased time at home means consumers will spend more on home improvements. Do-it-yourself (DIY) renovation products and tools, as well as gardening equipment, should become hot items.

Healthcare Products: The downturn should have little impact on healthcare products, since demand is already strong among an ageing population. The recession, however, will push consumers to cut medical expenses by spending more on over-the-counter medicine and vitamins, as well as self-care devices such as thermometers and blood-pressure monitors.

Environmentally Friendly Products: Consumers are more likely to buy green products, including those promising to cut energy costs and help save the environment. Government economic stimulus packages may also highlight environmental protection to help drive domestic demand and create jobs.

"Since different products have different prospects across various markets, suppliers should have a clear picture of market demand before making any investment," Mr Poon said.

It is unclear how long the changes in consumer behaviour will continue, according to the report. Some observers, it says, expect frugal habits to remain long after the economy recovers, citing Japan's economic gloom in the 1990s. Others predict previous lifestyles and buying preferences will return after markets rebound. Mr Poon, however, said that the longer the downturn, the lower the probability of a return to pre-recession behaviour.

"Especially in the US and the UK, there may well be a long-term shift toward high savings, as personal assets are not going to rise in value as they did in the past. Consumers are therefore expected to continue to spend cautiously in order to save, perhaps by forgoing unbridled consumerism in a permanent way," Mr Poon noted.

He advised Hong Kong manufacturers and exporters to take a back-to-basics approach, emphasising product pricing and function. He also pointed out that unfavourable conditions in traditional markets don't mean that consumers stop shopping.

"Consumers adjust their buying behaviour to live with economic troubles. Hong Kong traders can capitalise on new market conditions by adapting, so they maintain a share of traditional markets," he concluded.

Media Enquiries
Please contact the HKTDC's Corporate Communication Department:
Victor George Paddy       Tel: (852) 2584 4517
    Email: victor.paddy@hktdc.org

About the HKTDC
Established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 offices worldwide, including 11 in the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and the mainland, while providing information via trade publications, research reports and online. For more information, www.hktdc.com

 

Content provided by Hong Kong Trade Development Council