Management Dialogue
Mikael Jaeraas: Consumer Centricity Enhances Brand Partnerships 202
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    Only the world's best shopping malls can attract international brands and top brands naturally gravitate to outstanding malls. So, how can Hang Lung establish good relationships with globally renowned brands? And how should we go about attracting them to choose Hang Lung malls as their home? In this issue, we speak to Director – Central Leasing, Mr. Mikael Jaeraas, about the work of the Central Leasing Team.


    Catering to the Needs of Customers

    This question often pops-up in people's minds: Why does a property developer need to engage their customers? All it should need to do is rent out the space and collect a steady income. However, as we enter a new era of retail, property developers need to become relevant to the market and be the source of engagement, experience, and convenience to customers. This is an opportunity for developers like us to create a competitive edge that will help us to retain and add brands, Mikael elaborated.


    As the Company's approach is to be customer-centric, Mikael said, "We need to create a one-to-one relationship with customers. We need to know exactly who we have, who we are catering to, and their needs." The Company's focus on experience, service and technology enables us to read demand and then exceed whatever that demand is, he added.


    To become relevant, another thing developers need to refine very carefully, is a mall's positioning. The Company has three distinct positionings for its Mainland malls, from Plaza 66's Home to Luxury, regional malls with luxury content, and regional lifestyle malls to cater to a local catchment area. In Mikael's view, positioning is constantly evolving. Malls need to read the customers' needs and adjust. Shifting sentiments and preferences of customers mean that ideal positioning is often a moving target, so we need to evolve with the market. "Taking Grand Gateway 66 as an example, 10 years ago it had a certain tenant mix, but with the completion of the renovation, you will be looking at a premium tenant mix with first class luxury on the ground floor, which 10 years ago would be unthinkable," said Mikael.


    Effective Synergy and Collaboration

    Hang Lung's leasing portfolio has over 2,000 business partners, with quite a number of them being common tenants across our portfolio. For this reason, the Company needs to have a central point of contact. This is the reason that gives rise to the Central Leasing Team. The team is busy with three main roles. First, the team needs to deliver revenue and key account management. The second function is about developing tools and best practices to share across the Company. Finally, the team needs to lead strategic planning and act in an advisory capacity to maximize the collaboration with various brands across the portfolio.


    According to a research report, Chinese shoppers represented 32% of the global luxury sector last year. There are abundant opportunities as China to-date represents the single largest luxury market in the world. Mikael said, "If brands want to be part of this growth, they will need to have a strong presence in cities where you have the strongest luxury clusters." The Company is very fortunate to have a very strong foothold in Shanghai, one of the key cities in China, possessing by far the best luxury proposition. Beyond Shanghai, the Company has also established its presence in other Mainland cities where there is huge personal wealth being built. Mikael said that this gives us a unique opportunity to build relationships with the best global luxury brands.


    Mikael elaborated that the Company cherishes every relationship with its tenants and partners. But how does the Company identify critical tenants? "In the global luxury sector, a few retail groups dominate the high end market and have a big impact. These brands have a luxury premium positioning and a consumer appeal that has brought in consistent business for decades. More importantly," he added, "these brands tend not to over-expand in the market, which is very important to us, because it maintains uniqueness." He quoted an example of a brand at Plaza 66 that sells bespoke jewelry only at Plaza 66 and not at other outlets because of specific consumer demographics and consumption patterns that are unique to Plaza 66. If we are able to share these insights into consumer behavior and best practices across our portfolio of properties, we will be able to take the relationship with our brand partners to another level. With a long-term view on how to build and how to develop, we can achieve the best possible scenario in the market.


    Foundation for Sustainable Growth

    With about 15 years in international retail, Mikael highlighted a couple of different things which makes the Company stand out among its competitors. "We have the resources to constantly reinvest and keep up our properties, regardless of the economic situation – be it an upswing economy or a downward trend." This is very different from a lot of the regional or global developers as they will be geared in terms of debt very differently he added. Another competitive advantage we have honed is that, due to scale, the Company has managed to attract and retain top talents. Mikael opined that in a market that is growing quickly, like the real estate market, execution is one of the areas where a company needs to stand out from the crowd. Hang Lung is well positioned for growth with our investment philosophy which is to build world-class retail destinations.

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