Circle K’s OK Stamp It loyalty scheme may be designed for consumers in Hong Kong, but convenience store owners in this country can still draw inspiration from it
Hong Kong, a country of seven million people, has long been known for its innovative, successful convenience stores. Even by its standards, however, the way that one company has managed to engage one million islanders with its smartphone shopping app is a remarkable feat of retailing.
Convenience Retail Asia operates 332 Circle K c-stores in Hong Kong and 109 franchises in southern China, as well as 143 St Honore bakeries. Last week, its chief operating officer Pak Chi Kin told UK retailers how the company had done it.
First is the context in which the company operates. Hong Kong’s population lives in tightly packed high-rise coastal strips and were early adopters of e-payment and mobile shopping. Around 50% of all payments are made using e-payment systems such as Alipay or the Hong Kong government’s Oyster Card-style Octopus travel cards.
This has created the perfect environment for Circle K to upend the traditional convenience store model, focusing its marketing and operating strategy on smartphone-obsessed consumers.
Mr Pak emphasises his shoppers want an easy, fast and simple shopping experience. “Getting a meal in a c-store is faster than getting a meal in a fast food restaurant,” he says. “You can get a meal in less than a minute.”
At the centre of the company’s disruption strategy is a loyalty scheme that integrates the online and in-store experiences.
An in-house team developed OK Stamp It, an app which targets two benefits for shoppers using e-stamps. These can be exchanged for either money off (providing value) or collectable toys (providing a fun shopping experience).
Mr Pak said investment in the app was constrained by the fact that c-stores are penny businesses so the focus is on offering value, such as getting a sixth litre of fresh milk free when you have bought five.
But to be successful, loyalty schemes need scale so Circle K invested in giving away a collection of toy monkeys called ‘Monchichi’ to customers using the app. This increased downloads to more than 250,000 in four weeks and similar promotions have helped it pass through the one million barrier.
Another challenge was making OK Stamp It as easy to use as possible. Every Circle K has an Octopus reader and e-payment readers by the till, and shoppers are used to tapping these for payments. The tap-and-go nature of this transaction is important, as if shoppers had to find an app on their phone and touch it to another screen, this would upset shoppers at the back of the queue, Mr Pak explained.
Shoppers can link their Octopus card to the app to make payments, after which Circle K is able to track their shopping behaviour. This valuable data is owned by the company.
But setting up OK Stamp It was only the beginning. The company has had to introduce new features to keep shoppers engaged. The company works with suppliers to provide an e-gift option, which targets shoppers for free samples of new products. The scale of Circle K’s loyalty scheme makes it attractive to big packaged goods companies who want to target certain shopper groups.
The app also draws shoppers’ attention to new products and in-store deals. Its latest innovation is lucky draws. For example, the company paid for 100 iPhone Xs to offer as prizes, with three phones available each day. A countdown tool in the app lets customers know how many prizes are available at any one time.
The most important thing, Mr Pak says, is the app works alongside traditional convenience – its most active users spend 18% more in store.
Read more insight from the retail study trip.