Parknshop, meanwhile, runs high- to top-end stores Taste, Gourmet, and Great, as well as the recently-launched, moderately up-market International, under its umbrella of over 200 master brand outlets. Not forgetting, of course, upscale international rival City Super, which has six stores in Hong Kong and two in Taiwan. But can an island of just over 1,000 square kilometres and seven million people support such a proliferation?
One agency source argues that extensive sub-branding is a winning strategy necessitated by Hong Kong’s exorbitant shop rental prices. “The cost of rent here is significantly more than anywhere else,” the source says. “Supermarkets have to segment carefully to ensure they are targeting the right consumer in the right area.”
Indeed, Parknshop’s head of marketing Angie Lee explains the strategy behind the group’s sub-branding initiatives is to ensure that consumers from all income groups and cultural backgrounds are effectively catered to.
Richard Kwang founder and chief executive of Strategic Marketing Group, compares the sub-branding to the casting of a net into the ocean, and argues that diversification is the natural progression after having established a successful central business. “When a brand stabilises, the business saturates,” he says. “Brand migration becomes necessary. The sub-brands are there to target different market segmentations.”
Kwang adds that exclusive supermarket brands reflect the city’s upwardly-mobile consumers. “People in Hong Kong aspire to a higher lifestyle,” he says. “They want status. They want to be able to tell people they shop at Great.”
The recent launch of International by Parknshop in the popular Happy Valley district is simply feeding an aspirational demand, Kwang adds, explaining that it targets a more sophisticated consumer than Parknshop and Wellcome, which are “for the masses”.
But what about the risk of diluting the masterbrand? Kwang shrugs off the notion, saying the launch sub-brands is “an act of brand enhancement” and a “reinforcement of the dynamics of the over-arching brand”.
Ian Thubron, TBWA’s EVP for Asia and chief executive of TBWA Hong Kong notes that most consumers do not associate exclusive supermarkets like Oliver’s and Taste with Wellcome or Parknshop. “People see them as individual, specialised brands with a specific proposition and positioning, so there is no conflict with other brands in those corporations.”
He is adamant that Hong Kong, with its combination of affluent locals and expatriates, is a city where a multitude of supermarket brands can flourish, as each one targets a different segment of society.
Thubron says Hong Kong is now “well served”, and predicts that overseas retailers will focus on new markets such as China, India and Thailand rather that Hong Kong, “purely on the basis of numbers”.
“Retailers are reacting to market forces and the developing consumer,” he says. “The audience has matured. People have more disposable cash, their tastes have become more discerning.”