The Impact of Online Shopping on Traditional Retail in Hong Kong

This research report investigates the impact of online shopping on traditional retail shops in Hong Kong. The study employed both qualitative and quantitative data collection methods, including a comprehensive literature review, interviews with HKTV Mall relationship managers, and customer surveys. The findings reveal the increasing popularity of online shopping in Hong Kong, driven by factors such as product availability, convenience, cost and time savings, and customer service. The report explores the changing consumer behavior, the challenges faced by traditional retailers, and the future of both online and offline retail models in Hong Kong. The research aims to identify the growth of e-commerce, assess the status of traditional stores, analyze e-commerce's impact, and offer recommendations for the sustainability of both retail formats.

1
Impact of online shopping on the
traditional retail shops in Hong
Kong- Research Report

2
Abstract:
This research report elicits the findings from a study that was executed on the analysis of the
influence of online shopping on the traditional retail shops in Hong Kong. The study has been
conducted on an exploratory basis with the collection and analysis of qualitative and quantitative
data. Initially, a comprehensive literature review was conducted in order to gather substantial
knowledge on the concepts of online retailing, its various forms and the several advantages and
disadvantages that it offers to the retailers and to the customers as well. Then, a primary data
collection process was undertaken where an interview was conducted with some of the
relationship managers of HKTV Mall which is the largest online retail shopping mall in Hong
Kong. They were offered with online open-ended questionnaires where they offered their
feedback. After that surveys were conducted on some of the customers of the HKTV Mall that
are engaged in online shopping from the mall and also from other online or e-commerce business
establishments. The customers were offered with online survey questionnaires consisting of
closed-ended questions on their online shopping habits. Then, the phase of data analysis was
undertaken where the feedback from the interviews and surveys were analyzed to arrive at the
key findings of the study. The major findings from the study have revealed that online shopping
has been gaining immense popularity in Hong Kong like in other parts of the world. The modern
generation of consumers are preferring the online mode of shopping due to various factors such
as availability of a wide portfolio of products online, easy option to choose a product and make
payments online. Some of the other reasons due to which the customers are getting inclined
towards online shopping were found to be cost and time savings, high quality of customer
services, ability to conduct shopping 24x7 and the ability to offer instant feedback to the
companies about the purchase made.

3
Table of Contents
Abstract:...........................................................................................................................................2
Chapter 1: Introduction ...................................................................................................................5
Research Background:.................................................................................................................5
Research Scope:...........................................................................................................................5
Research Significance:.................................................................................................................6
Research Rationale:.....................................................................................................................6
Research Aims:............................................................................................................................7
Research Objectives:...................................................................................................................7
Research Questions:.....................................................................................................................7
Chapter 2: Literature Review...........................................................................................................8
Chapter 3: Methodology................................................................................................................16
Research Philosophy:.................................................................................................................16
Research Approach:...................................................................................................................17
Data Collection Methods:..........................................................................................................17
Qualitative:............................................................................................................................17
Quantitative:..........................................................................................................................18
Data Analysis Methods:.............................................................................................................19
Qualitative:............................................................................................................................19
Quantitative:..........................................................................................................................20
Chapter 4: Results..........................................................................................................................20
Interview findings......................................................................................................................20
Survey Findings.........................................................................................................................22
Chapter 5: Analysis & Discussion.................................................................................................31
Chapter 6: Conclusions & Recommendations...............................................................................34

4
References:....................................................................................................................................36
Appendix:......................................................................................................................................41

5
Chapter 1: Introduction
Research Background:
Online selling or E-Commerce selling has gained popularity worldwide including Hong Kong.
With the progress of globalization around the world there has been immense technological
advancement in the various methods and processes in which the modern business activities are
being carried out by the several business organizations (Statista, 2019). One of the massive
discoveries for human beings has been the Information and Communication Technology and it
several applications in business. The growth and development of the nations like Hong Kong has
altered the tastes and preferences of the consumers to a great extent (Chanchal, 2019). Formerly,
the customers used to visit the various shops for choosing their desired products or services.
Decades ago the bricks-and-mortar form of shopping was more popular among the consumers in
Hong Kong as was the case with shoppers in the developed and developing nations (Cristina,
Elena, & Cristina, 2017). This research study has examined the impact of online shopping
behavior of the consumers on the future of the retail stores operating in Hong Kong. It is evident
that the consumers in Hong Kong, especially those belonging to the young generation are avid
users of internet technology and they prefer to use their smart devices like smartphones to take
part in online shopping that has impacted the growth and development of the retail shops in the
country (The Hindu Business Line, 2019).
Research Scope:
The scope of the research encompasses a study of the changing consumer behavior of the people
of Hong Kong who has shifted from physically visiting the various retail shops and making a
purchase of their favorite products (Bhattacharjee, Saha, & Begum, 2012). Majority of the
customers belonging to the young and middle-aged population are preferring to buy there desert
products and services by using their smartphones and other electronic gadgets that use the
internet and digital communication platforms like various mobile applications which have made
it easy for consumers to choose their products and make purchases online (Enache, 2018). The
scope of the research study has been limited to studying the impact of online shopping on one of
the online retail organizations in Hong Kong known as the HKTV Mall from the perspectives of
few of the relationship managers of the mall as well as collecting feedback from some of the

6
customers that are regular consumers of several products and services from the online retailer
(The Times of India, 2018).
Research Significance:
The significance of this research study is that it has helped to determine the impact that the
modern methods of online shopping or E-Commerce shopping is having on the traditional retail
shops in Hong Kong. It is undeniable that online shopping behavior of the modern consumers
has a negative influence on the traditional and conventional retail stores in Hong Kong which are
operating for several years. The study has shed light on the extent to which the traditional shops
has been affected due to the increasing popularity of e-commerce platform of shopping that the
majority of the modern customers are indulging in (Pando, 2018). It is expected that the findings
of this research study will help to reveal a realistic picture of how the conventional retailers in
Hong Kong has been actually impacted by this changing consumer behavior since decades. It is
important to determine the future growth and sustainability prospects of traditional retailing as
well as online retailing in Hong Kong and this research has made a significant contribution in
this direction (Svatošová, 2015).
Research Rationale:
The rationale for the research is that the subject that has been chose for this study is a highly
relevant topic in the domain of business research. It can be said that there has been an
unprecedented change in the technology that is being observed by the modern business
establishments around the world. The developed and the developing nations are coming up with
commendable improvements and innovations in the internet and digital communication
technologies that have been enriching not only our personal lives but our professional lives as
well. As it is evident that technological progress has a positive impetus in business but it cannot
be denied that too much dependence and utilization of technology has been acting as potential
barriers and challenges for many of the traditional business establishments such as the bricks-
and-mortar retail shops in Hong Kong. The popularity of online shopping has been a cause of
major threat to their existence that needs to be studied in order to understand their positions and
future growth and sustainability options as the demand for internet technologies in business and
shopping keeps on rising (Li, 2019).

7
Research Aims:
The aims of the research study encompass understanding the causes behind the rising popularity
of e-commerce companies and online shopping behavior of the consumers in Hong Kong and
determining the ways in which such consumer behavior are effecting the conventional and
traditional retail stores in the country. The study has aimed to find out the major challenges and
barriers that the traditional retail stores are facing in the country due to the fast increasing
demand of online or e-commerce business establishments that are ready to offer the facilities of
online shopping for the modern tech savvy consumers. Furthermore, the purpose of the study has
been to determine the reactions of some of the online retail business managers as well as online
retail customers in order to evaluate the reasons of popularity of e-commerce among the
consumers and the future of the traditional and online retail stores in the country. The study also
aimed at offering suggestions to the traditional retailers as well as the online retailers as to the
ways in making their businesses grow and sustain within the extremely competitive and dynamic
business environment of retailing in Hong Kong.
Research Objectives:
The research study has aimed to achieve the following objectives:
 To identify the growth of e-commerce shops in the retail industry of Hong Kong
 To assess the current status of the traditional retail stores in Hong Kong
 To analyze the impacts of e-commerce growth on the traditional retail industry in Hong
Kong
 To offer suggestive recommendations to ensure continuity of traditional retail shopping
as well as supporting the growth of e-commerce or online retailing in Hong Kong
Research Questions:
The research has sought answers to the following questions:
 What are the growth trends of e-commerce industry in Hong Kong?
 What is the current status of retail industry in Hong Kong?
 What is the effect of the growth of online shops over the traditional retail shops in Hong
Kong market?

8
 How can the sustainability of traditional retailing be ensured along with the growth and
development of online retailing in Hong Kong?
Chapter 2: Literature Review
This section of the study shares the knowledge that has been gathered by undertaking a
comprehensive review of various sources of literature such as online journals, websites and
reports on the subject of the future of traditional retailing, the emergence of online retailing and
the several challenges and opportunities that modern e-commerce retailing offers to the retail
business sector. The learning imbibed from this section has been instrumental in forming the
foundation of the research study in terms of understanding the reasons behind the increasing
demand for online shopping and the several barriers that the traditional retailers have been facing
due to this imminent threat of e-commerce platform of selling products and services.
According to Amaro & Duarte (2015), since decades, the domain of retail shopping has been
dominated by the conventional retail stores which can be considered as bricks-and-mortar format
of selling products to the consumers. The advantage of traditional retail stores is primarily the
benefit that they offer in terms of offering the opportunity of tangibility of the products that the
consumers can see and physically touch before they make up their minds to either purchase the
products or abstain from making any purchase if they are not satisfied with the product. This was
one of the reasons behind the time taken for or e-commerce online platform of shopping to
become popular among the consumers. The conventional consumers preferred to see and
examine the products with their own hands and observe a physical demonstration of the use of
such products before they finally decided about purchasing the product or not. Decades ago
when the e-commerce form of business started to open up globally, the initial reaction of the
customers was not highly encouraging because the majority was not aware of the internet and
digital communication technologies and there was no adequate resources and infrastructure to
support the large-scale acceptance and implementation of e-commerce strategies. The general
awareness of the public about the technology was also extremely low due to which the majority
of the consumers we are not confident on the technology and they considered the traditional form
of retailing to be more effective and authentic way of shopping. However, the inception of the

9
era of globalization started to enhance the growth and development in internet and digital
communication technologies along with increasing the awareness of the public about online
business activities. Gradually, internet technology started influencing the lives of the people and
with the efforts of the governments to make this technology accessible to the majority of the
population the e-commerce format of business started to gain enhanced acceptance among the
consumers (Amaro & Duarte, 2015).
In the opinion of Nagar (2017), the popularity of online shopping has been increasing in different
parts of the world like India. The concept of online shopping has already been popular in the
developed nations but nowadays even in the emerging and developing nations the popularity of
online shopping has been increasing. The reason behind this increasing popularity of online
shopping is that there has been a rapid growth and development in digital communication
technologies and information technology that has engulfed the entire global domain of
consumerism. There are various retail companies that are offering their products and services
through the e-commerce model of selling with the help of their official websites. The modern
consumers are inclined to using internet technology for a variety of purposes such as doing
shopping. It has been identified from the study that consumers have preferences for online
shopping websites of various retail business establishments and it directs their attitude and
purchase intentions. The retail business establishments should focus on observing multi category
purchase model for ensuring that there is an increase in the purchase intention of the consumers.
The retail shops in India have been affected to some extent by the increasing popularity of online
retailing which has been a highly desirable and popular method of buying and selling of various
products and services within the country. Therefore, it is evident that online retailing is gaining
popularity in the country and it will offer an array of business opportunities to the Indian retail
sector despite the challenges and threats offered by online retailing to traditional retailing (Nagar,
2017).
According to Cost (2016), today, the volume of trade and commerce that is being undertaken
through electronic commerce has been increasing at a rapid pace with the unprecedented growth
and development of internet technology. Various types of business establishments now have the
opportunity to enhance the sale of their products and services and the opportunity of maintaining
close contact and a direct relationship with the consumers where there are no intermediaries

10
between the business and the consumers. With the passage of time more and more number of
consumers are turning to the internet services for the purpose of conducting online shopping. The
advantage of online shopping is that the consumers have the option to directly purchase their
chosen products or services from a virtual shop. It is highly convenient for people to shop for
their favorite products and services from the comfort and convenience of their residence or
workplace. One of the major advantages of online shopping to the consumers is that the
consumers can read the various reviews shared by other consumers about the company and its
products and services. This increases the credibility of online retail business establishments
which is one of the major reasons why a large number of customers today prefer to shop from
online retailers rather than from traditional retailers. Some of the major products that are
purchased online by the Indian consumers consist of branded or unbranded clothes, accessories,
home decorations, technology products, etc. This has been encouraging for the economy and for
the online retailing companies but for the traditional retailers, they are finding it difficult to
attract and retain customers which can be one of the negative sides faced by traditional retailing
in India as in other parts of the world (Cost, 2016).
In the opinion of Mpinganjira (2016), the rapid growth and development of Information and
Communication Technology has significantly transformed the way in which retailing business is
undertaken today. The popularity of online retailing has been growing rapidly around the world
as also in South Africa. Today the consumers are happier to buy products and services by using
the internet services and several mobile applications. The modern world has grown in
technological development to a great extent and this immense growth in technology is reflected
in various methods in which the modern business operations had been undertaken in the retail
segment. There are several reasons that attract the modern customers towards online shopping
such as the security features provided by online stores in serving the customers with their desired
products and services, the navigation aids of the websites of the online stores, the offerings from
the online store and the reliability of the fulfilment of services offered by the online shop. It is
evident from the research study conducted on some online customers in Gauteng in South Africa
that the online consumers have a positive post purchase attitude and if they are satisfied with the
products and services offered by the online shops, then they will most likely consider a
repurchase from the same store. So, there has been a noticeable growth and development in
online shopping in Africa in the past decade but there is still plenty of opportunity for the online

11
form of shopping to achieve the desired scale. This will result in a decline in the popularity of the
conventional retail stores but it can be said that there will still be many customers that prefer to
utilize the traditional method of shopping by visiting different stores and purchasing their desired
products and services (Mpinganjira, 2016).
According to Shanthi and Kannaiah (2015), e-commerce is the future of retailing in all the
developed and developing nations in the world. Organized retail in different countries like India,
China and the US still lacks the required reach to the large population. The large retail chains
that operate on the traditional bricks-and-mortar model are not enough to cater to the demands of
the consumers in the small towns as compared to that in the bigger cities. Therefore, one of the
major reasons for the popularity of online retailing is that it has made several products and
services accessible to the people in the smaller cities and the rural areas that the traditional
format of retailing was unable to satisfy. Hence, there has been a rapid growth in the popularity
of e-commerce or online retailing and it is expected that its popularity will grow in the coming
years which will cause a positive as well as a negative impact on the economy of these countries.
The retail business establishments that have espoused the online or e-commerce model of selling
their products will have more opportunities of being profitable and sustainable as compared to
the retailers that do not have the online shopping facilities for the consumers (Dr.R.Shanthi &
Kannaiah, 2015).
In the opinion of Singh, Dash and Kumar (2016), the future era will be that of the internet
shopping malls where the consumers will be able to buy their favorite products and services by
being able to choose their desired products from the internet shopping malls where the
consumers will be able to browse through the websites or through the utilization of mobile apps
to partake in product searching. The consumers have the opportunity to go through all the details
about several products and brands such as the specifications, prices, discounts, delivery options,
payment choices and others and this is one of the major reasons for the rising popularity of
Internet shopping malls such as Flipkart, Amazon, eBay, Myntra and others. So, the TOPSIS
method has been used in the research study for the purpose of ranking various internet shopping
malls and the application of modified TOPSIS has been conducted for checking the sensitivity of
the results of the study. The study has reflected that the competitive advantage of the various
internet shopping malls can be achieved by consideration of social factors like the online

12
reputation of the internet shopping malls and the dimension of information and e-services that
are offered by the Internet shopping malls. So, some of the most important reasons for the
increasing demand for online or internet shopping malls are the changes in the consumer
behavior and hence it is possible that the popularity of the traditional retail shops will diminish
over the coming years as a large section of the customers will shift to online shopping from
traditional retail shopping. Therefore, it follows that the conventional retail business
establishments need to develop competitive business strategies so that they can complete with
the online retailers and continue to remain profitable and sustainable (Singh, Dash, & Kumar,
2016).
As per the observation of Meshram (2016), it is undeniable that there has been an increasing
trend in online shopping of the modern consumers over the several fixed shop retailers. A large
section of the population is dependent on the retail segment for or purchasing several products
and services of their needs. The group development of e-stores has proved to be highly attractive
for the retail consumers because they are able to choose their favorite products and services and
get the delivery at their door steps. The online retail stores also offer substantial discounts which
is one of the major reasons why a large number of customers are preferring to buy from online
retailers then from the conventional online shop retailers. The other reason behind the preference
of online retailing over traditional retailing by the majority of modern consumers is the wide
variety of the several products that are being offered by the online retailers. Hence, these are the
major areas where the traditional fixed shop retailers and lagging behind the modern online
retailers. So, it is likely that there will be a decline in the number of footfalls to the traditional
fixed shop retail business establishments due to the substantial increase in the popularity of
online shopping by the modern generation of consumers (Meshram, 2016).
In the opinion of Akorush & Al-Debei (2015), it is an important aspect of investigation to
identify the factors which affect customer attitudes towards various aspects of online shopping.
A research has been conducted with the aim of examining an integrated model highlighting the
factors which affect attitudes of the customers towards online shopping. The investigation has
been conducted in Jordan on some of the online shoppers. The integrated model has been
analyzed intricately whereby, the perceived relative advantage, website reputation, trust, and
website image affecting attributes of the consumers toward online shopping have been analyzed.