The experience of perusing through a shopping mall is not quite the same as shopping online. Wandering from shop to shop to the mixed sounds of tunes and chatter; sifting through racks of sale items not knowing what you’ll find; feeling the quality of a designer handbag or trying on a pair of shoes that caught your eye; taking in the surprise fragrances of sweet-scented perfumes; and following your nose to the fares in a bustling café or food court when your legs need a rest. It is this experience – and so much more – that is offered at one of Hong Kong’s largest department stores, SOGO.
The Japanese-style department store prides itself on being a one-stop shop. Standing at 19 floors in Hong Kong’s iconic retail hub, Causeway Bay, it has everything from high-fashion labels and cosmetics, to the latest electronics and kitchenware.
Operating this behemoth is Hong Kong-based Lifestyle International Holdings. “We believe that the physical store still has something to offer which is hard to replicate online,” Executive Director Kamshim Lau tells The CEO Magazine. “For many people in Hong Kong, shopping is partly a social experience. There are certain things which we have inside our store, like our café, our bookstore, and our supermarket, where different vendors hold their events, and many people like coming in to experience that.
“It’s something which, in the long run, still has value for the customer despite the onset of ecommerce and technology. Which means that, for us, one of the key things we need to do is make sure that we stay on top of the customer service and experience side of the business. We believe the human connection in retail is very important.”
Rise and fall, rise again
SOGO’s roots go as far back as 1830 when it was first founded by Ihei Sogo in Osaka, Japan. The company initially sold used kimonos and eventually grew into an established retailer. Listed on the Tokyo Stock Exchange as SOGO Co, it steadily spread its reach into other Asian countries including Hong Kong and China, but in the 1990s it hit a major obstacle.
Former chairman of SOGO Co, Hiroo Mizushima, viewed its expanding department stores as real estate businesses that could gain profit by developing the land it had control of. While this initially led to rapid growth for the company – expanding to 27 stores – it eventually went south during the economic collapse in Japan, which drove land prices down. The company then revealed it was JPY1.7 trillion in debt, and was eventually forced to declare bankruptcy. The company’s executives then sought a sponsor to take control of its stores and, in 2001, Lifestyle International Holdings acquired its SOGO Hong Kong business.
“Working with Lifestyle International Holdings is consistently inspiring. Bold and visionary, the company is also highly supportive of its trade partners, as evident in newsworthy and effective initiatives such as the installation of Asia’s largest outdoor LED screen.” – Diana Hui, Managing Director, Parfums Christian Dior Hong Kong
Life in Lifestyle
Lifestyle International is a family business headed by Hong Kong billionaire – and Kamshim’s father – Thomas Lau Lue Hung. It operates the SOGO store in Causeway Bay as well as the sister SOGO store in the Hong Kong district of Tsim Sha Tsui. The company is also involved in property development and investment.
Despite her family owning a business, Kamshim didn’t opt to join straight away. She completed a degree at the University of London before travelling to the United States to complete her master’s at Columbia University. Afterwards, Kamshim remained in New York and secured her first job at acclaimed fashion label, Ralph Lauren.
“At Ralph Lauren, I was working on the merchandising side of the business,” Kamshim explains. “It was very interesting because Ralph Lauren is such a big corporation. They have so many different departments and a lot of established working processes. I got to see everything and it was really useful. I was exposed to different types of people who worked in such a big company.
It allowed me to learn and adopt different types of practices that I could bring to Lifestyle.” Armed with this experience, Kamshim developed a knack for doing what she describes as “nitty-gritty” work. “Everything at Ralph Lauren was all about details,” she explains. “I conducted several reports and used Excel a lot.”
One of the greatest takeaways Kamshim learned from her time at the luxury brand was the importance of building a tight-knit internal culture within the company. “Everyone was so passionate about working for Ralph Lauren,” she recalls. “They had a very strong internal culture and I thought, for Lifestyle or for any other business, that’s super important.”
After two years with the fashion company, Kamshim decided to move back to her native Hong Kong. “Ralph Lauren was a wonderful experience, but I had a couple of reasons why I wanted to move back to Hong Kong,” she explains. “One was because my family is mainly here; I wanted to be closer to them in the long run. The second reason was because there is this huge opportunity for retail in Asia and, by coincidence, my family also works in the retail business.
With other family businesses, I think there is always some sort of plan that the son or daughter would come back and take over; but there was never that sort of planning for me. “The timing just worked out and I thought, ‘Let me just give it a shot’, and I started working here at Lifestyle.”
Kamshim explains that the skill sets she learned at Ralph Lauren, particularly when it came to attention to detail, were transferable when she joined Lifestyle International. She spent the first year and a half rotating between different sales departments within SOGO, starting with the supermarket.
She continued to be involved in several areas of the business after this, from apparel to beauty and the luxury department, before taking on a role to lead the International Luxury and Sales Promotion department. With all that experience under her belt, she was then appointed Executive Director in 2016.
“OMEGA’s treasured business relationship with SOGO began in 2005. SOGO’s global marketing sense and loyal customer base has ensured its place as the leading department store in town. We appreciate SOGO’s sincerity and support throughout these years and look forward to our continuing partnership.” – OMEGA
In this leadership role, Kamshim says she still focuses primarily on sales and marketing, but the scope is much wider. “I deal with a lot more departments internally. I still regularly meet with our vendors and different brand partners, but right now, I get involved in other areas such as risk management and talent recruitment, and I regularly meet with the investment and ESG (Environmental Social Governance) committees.”
In 2014, the company’s flagship SOGO store in Causeway Bay underwent a massive revamp which was several years in the making. “It was quite a big project for us,” Kamshim notes. “The whole purpose of the project was to solidify the long-term positioning of our store and to upgrade our physical assets. We had to replace everything because it was so old. It was a very complicated process and involved basically everyone within the company working together to make it happen.
“We redefined and re-allocated entire product categories and brands to different floors within the store, so it took a lot of internal coordination and planning. We upgraded the outside facade, the flooring, the elevators, the escalators – everything. We even incorporated LED signage and screens inside the store. It’s been four years since we started this process and I think the response so far has been really good.”
Among these upgrades was the launch of CVISION, the largest high definition outdoor LED screen in the Asia–Pacific, measuring 19 metres high by 75 metres wide, equivalent to the size of five tennis courts. “It was quite a significant investment for our company,” Kamshim says. “It was interesting because previously the facade was hung with traditional banners. We would rent it out to the brands within our store for a month, then we’d change the banners. Contractors would have to take down the old banners and destroy them.
Lifestyle International’s major milestones:
SOGO opens in Hong Kong
SOGO Causeway Bay expands and becomes known as ‘Jumbo SOGO’
Lifestyle International acquires SOGO and is granted a licence to use the SOGO trademark in Hong Kong. SOGO opens Freshmart supermarket
Opens Beauté@SOGO store. Opens Nufront clothing store. Takes over operation of Daiso Land
Lifestyle International lists on the Hong Kong Stock Exchange. Grand opening of Shanghai Jiuguang. SOGO named one of the most popular retail outlets for Chinese turists
SOGO’s second department store opens in Tsim Sha Tsui, Kowloon. Launch of SOGO Club, an exclusive lifestyle service centre
21st anniversary of SOGO Hong Kong. Opening of Wa San Mai. Shanghai Jiuguang store achieves a record 60,000 visitors. SOGO Causeway Bay reaches HK$32.7 million for ‘Thankful Week’
Lifestyle International named one of Forbes ‘Asia’s 200 Best Under a Billion’. Acquires Xian Tian Xia Square, the largest retail shopping centre in Shijiazhuang, Hebei
Releases SOGO Visa Platinum card
Jiuguang department stores in Suzhou and Dalian begin operations
Completes spin-off lifestyle properties development business, which lists on the Hong Kong Stock Exchange. SOGO Causeway Bay ‘Thankful Week’ achieves record sales of more than HK$797 million
SOGO Tsim Sha Tsui relocates next to Sheraton Hotel
SOGO’s 30th anniversary in Hong Kong
Launch of SOGO rewards program. Acquires land in Kai Tak to develop twin tower complex. Completes spin-off and separate listing of mainland China department store and supermarket business under Lifestyle China Group on the Hong Kong Stock Exchange
Completion of final phase of SOGO Causeway Bay’s multi-year revamp. Launch of CVISON, the largest outdoor LED billboard in APAC. SOGO ‘Thankful Week’ sales exceed HK$1.6 billion
“With this screen, we can have multiple companies showcasing their brand each hour. They can showcase their digital content at the best possible angle as the technical quality of the platform is world-class. Now when we work with brands, they’re very excited to see how to make use of this screen, especially since the traffic outside of our store is significant,” she explains.
“Each month we have around 10.6 million people passing by outside our store. The eyeball opportunity for both our tenants and outside brand partners is significant, making it a great reason to use the screen.”
Going forward, Kamshim hopes to see how the screen can be further integrated with what the company does inside the store. “Our screen has other capabilities which we have not used yet, such as live feeds and interactive features,” she adds.
Shopping in the future
While Lifestyle International is still deeply rooted in preserving its brick-and-mortar store, it acknowledges that it will eventually have to incorporate ecommerce. “We have a traditional working culture within the company and our core retail business is still very much brick and mortar,” Kamshim says. “Many of our employees have been with us for a very long time. They’re very loyal and the business has been successful. At the same time, it means that when you try to bring change or instil a mindset that embraces change, the process is not as smooth.
“So, for me, it’s about how to instil a more open mindset and culture within the company. And that takes time to develop. It’s a generational thing; when we hire younger employees, their mindset is a little different from our older employees. The employees who have been working with us since 1985 have a set way of doing things. So looking at how to bring both these generations together is a little challenging but it’s something we are doing gradually. The retail environment is extremely competitive now and the pace of change continues to quicken. As management, we need to ensure that our business and our employees are well-equipped to adapt and not fall behind.”
The company is already looking at plans to go digital with an online ecommerce store. “In terms of ecommerce, it’s not a matter of whether, it’s a matter of when,” Kamshim says. “At the end of the day, we realise that our core model is still brick and mortar, so we need to first look at how to further enhance and build upon our main value proposition in the long-term.
“We are always looking at ways to provide a deeper human touch to what we do in our business for the customer. Our store has been part of the childhood memories of so many people who grew up in Hong Kong, so we hope to keep that brick and mortar tradition in the future.”
Customers at the core
The main strategy for Lifestyle International is to stay true to its core value proposition. “It is to provide a one-stop shopping environment where we offer the best-of-class products, brands, and services for our customers,” Kamshim notes. “Even though the retail environment keeps evolving – which we will adapt to – I think we need to make sure that we stay true to our core identity, because that is what differentiates us from our competition,” she says.
“I also think that’s why our customers come to us, because of our brand positioning as a premium Japanese department store retailer offering a wide range of mid- to high-end products that can range from household accessories to luxury goods.”
The company has been looking at ways it can leverage data and technology to provide even better customer service. This culminated in the implementation of a new CRM system. “We never actually had our own database of customers,” she says. “Before, we mainly worked with the Bank of China for our database, but the database belonged to the bank. We could use the database, but every time we did, we had to request it from them. It meant we could not fully leverage it to do more targeted marketing.”
The new CRM program was launched in 2016 and now has more than 500,000 members. “The fact that these loyalty members comprise around 50% of our total store sales is quite a big achievement,” Kamshim marvels. “We built such a big database in such a short period and we hope to intelligently leverage the platform in order to engage more meaningfully with our customers.”
“Our store has been part of the childhood memories of so many people who grew up in Hong Kong.”
She adds that SOGO’s customer base is still largely local. “Even though we need to take care of our mainland visitor customers, we need to also take care of the needs and expectations of our local customers,” she says, “and that means getting more data and more feedback to build a better relationship with them.”
Enhancing customer retention means hiring the best people to work at SOGO. “Retail is quite a tough work environment, especially since our hours tend to be long and the intensity of the business is a lot higher when you compare it with other models in Hong Kong,” Kamshim says.
“It is a challenge for us to recruit the right people who have the skill sets we currently lack, and the skill sets we specifically need for retail. It is something we have to keep working on.”To further attract customers to the store, the company has plans to strengthen the experiential element within SOGO.
“Many customers like coming into our store because of our supermarket where we hold different food events each week,” Kamshim notes. “The continuous programming of events, festivals, pop-ups and activities within our store is one of our key strategies in retaining a sense of novelty and discovery every time a customer comes to visit our store.”
Lifestyle International Holdings is also looking at ways it can strengthen its ESG strategies at SOGO.“I’m working with our ESG committee on a strategic roadmap for the next few years,” Kamshim says. “We have a social responsibility as a corporate citizen to promote awareness of issues such as waste reduction, the promotion of sustainable products and the support of social enterprises.
“It doesn’t matter how high up in position you are, it’s important your colleagues know that you’re in this together.”
“One thing we have been doing is putting out green products,” she explains. “In our supermarket, we carved out a section where we promote vegetarian products to reduce meat consumption, which I think is better for the planet. And within the store, we’re looking into installing water refilling stations.”
Leading at Lifestyle
Kamshim emphasises the importance of listening to your colleagues when you enter a leadership position. “I learn a lot from my colleagues, and in turn what I get from them helps me become a better leader and work partner,” she notes. “I think when you enter such a position, it’s a two-way relationship. Obviously, your team would get direction from you but at the same time you have to be open-minded and have an interactive relationship with them.
“Also, as a leader, you have the responsibility to develop a culture where there is respect, trust and open dialogue between colleagues,” which she describes as “a culture where they can be comfortable to share their point of view within an environment that supports them”.
It is this respect and open dialogue that will help leaders in the long term. “If you want to execute a certain strategy, you cannot do it alone; you really need your team to be behind you,” Kamshim insists.
“My relationship with my team is more of a working partner or a colleague. For example, during ‘Thankful Week’, I go on the floor to help out and make sure everything is going okay. It doesn’t matter how high up in position you are, it’s important your colleagues know that you’re in this together.”
Thankful Week is a 17-day sale held in SOGO during May and November each year. The event is akin to the Black Friday sales in the US and the UK, albeit longer, and hundreds of shoppers wait outside SOGO until the doors open at 10am to rush in and secure a bargain.
The road ahead
The next venture for Lifestyle International Holdings is a new property development in Kai Tak, Kowloon – the site of Hong Kong’s old airport. The old Kai Tak International Airport dates back to 1925 and is notorious for its heart-stopping take-offs and landings.
Located in Kowloon Bay, the airport is unusually nestled among water, mountains, and now, many apartment buildings. During its first few years, Kai Tak was initially used as both a flying club and a military airfield, and after World War II it was a base for Hong Kong airline Cathay Pacific.
Greater demand on the airport led to the creation of a new runway, referred to as 13/31, which jutted out over one of the busiest ports in the world, Victoria Harbour. Taking off from the short runway was a challenge; just after take-off, airplanes had to make a sharp turn to steer clear of two steep mountains, Lion Rock and Beacon Hill.
“Lifestyle International has been very supportive of our retail diversification, with the inclusion of Gucci jewellery and Montblanc pens and leather goods. We are happy to work with such an open-minded partner, who always assists our projects for various watch brands.” – Rainbow Wong, Director, Fine Asia Watch
The descent onto the runway – which was nicknamed the ‘Kai Tak Heart Attack’ – had its own difficulties. When landing, planes had to quickly veer right when they saw ‘Checkerboard Hill’ – a hillside above Kowloon Tsai Park that was painted white and orange for visibility, followed by a descent above apartments, buildings and plane spotters before touching down on the runway.
And while this process was complex enough in normal weather conditions, it became even more difficult during typhoon season (between May and November). In 1993, a China Airlines Boeing 747-400 overran the runway due to gale-force winds, but fortunately there were no fatalities and the 23 passengers suffered only minor injuries.
Nonetheless, the runway became one of the airport’s busiest, with 36 take-offs and landings each hour. Passengers would either tightly shut their eyes or be nervously wide-eyed as the plane landed, which was commonly followed by a round of applause to the pilot as relief set in when the plane stopped.
The final aircraft to land at the airport was the Dragonair KA841 which came from Chongqing. It landed on 5 July 1998 at 11.38pm. The following day, the runway was officially closed, marking a total of 73 years of operations. Kai Tak airport has still remained a poignant memory for pilots, passengers and nearby residents.
In an article by the South China Morning Post, retired Cathay Pacific Captain Kim Sharman, who was the pilot of the final commercial flight leaving Kai Tak, said, “There’s no truth in the story that we could see people in their flats as we approached Kai Tak – we were too busy with our jobs. Naturally, we were always on our toes on the run in to Kai Tak, but you can’t forget the scenery was amazing.”
The old airport site is being used for new property developments like the one Lifestyle International is planning in the future. The company secured the Kai Tak site for HK$7.39 billion, the highest price set for
a government commercial site at that time.
“We aim to have it open in 2022,” Kamshim says. “It’s a significant project comprising twin towers, with a department store and a mixed use mall. As we own the property, the project provides us with an exciting opportunity to have a long-term vision on how to fully utilise the space and bring in new types of retail or complementary businesses.
“With our current stores, we have limited space and we try to work with what we have, but with this new blank slate, we have the chance to get quite creative.”