Hong Kong Department Stores succeeded in online sales by building social tools in from the very beginning.
Despite the Asian name, Hong Kong Department Stores is a Finnish company. It has 24 department stores in Finland. Miika Malinen joined the company three years ago as its e-commerce director to launch its online presence. The company now has three online stores in Finland and plans to go online with stores in 40 countries this year.
The chain is a general-purpose department store in its physical locations, but runs specialty stores online. Its online stores specialize in fishing, do-it-yourself, and toys. The chain's online strategy is to go narrow and deep; for example, its fishing store, Happy Angler, has about three times the inventory of its biggest physical department store.
Before launching online, the chain went social to talk to prospective customers. "I wanted to listen to their wishes, and find out what they want, what kind of products they want, and what kind of functionalities they want," Malinen said in a phone interview from Finland. "I had maybe 200 fishermen who help me very much."
Malinen contacted the owners of two online communities fishing, one with 15,000 users, the other with 12,000, and worked with them to recruit a core group of enthusiasts to collaborate with on building the stores. That core group of 200 was invited to a closed forum to discuss needs.
Hong Kong Department Stores decided to focus on fishing, toys, and do-it-yourself because Malinen believed those areas were optimal for stores with a strong online component. In fishing, for example, enthusiasts have strong opinions and are eager to discuss them. The strategy seems to work -- after a year, the company's fishing store has about 15,000 user-generated reviews for fishing gear. "I know that in the USA those ratings and reviews are very common, but in Finland, it is not so common," Malinen said. The company doubled its online sales in the second year, and is the biggest fishing gear retailer in Finland.
Looking ahead, the company plans an aggressive mobile strategy. It plans to develop smartphone apps to make it easier for its customers to catch fish. The mobile app will advise anglers on the kind of lure to use, what color it should be, and other hints, based on weather, wind direction, color of water, and many other factors. By making its customers more successful, Hong Kong Department Stores hopes those customers will keep coming back for more business.
Interestingly, while mobile has been a threat to many physical retailers, it has apparently helped Hong Kong Department Stores succeed in its physical stores. "When we opened our online stores, our physical store sales grew," Malinen said. The chain opened kiosks to the online store in its physical stores, where customers can look over reviews and get product information, which provides improved customer service. Also, customers browse online and then pick up merchandise at a physical store.
To deploy its online stores, Hong Kong Department Stores uses IBM Smarter Commerce. (IBM sponsors Internet Evolution.) The IBM technology delivers personalized shopping experiences to consumers. The retail chain also uses IBM Web Analytics for trends and personalization.
By the way, I forgot to ask how the Finnish Hong Kong Department Stores got its Asian name. I'll follow up on that -- look for the answer in the comments below.
Related posts:
Stuff We Don't Want to Hear About in 2013
Retailers Push Back Against Showrooming
Showrooming With Santa
— Mitch Wagner 
, Editor in Chief, Internet Evolution
`
Email This
