Nick Price, Deliveroo Hong Kong General Manager. (PROVIDED TO CHINA DAILY)
Delivery platform Deliveroo is doubling down on Hong Kong’s food-and-beverage market despite widespread concerns over the sluggish economic recovery, with a key business priority being to focus on the city’s growing grocery demands.
“The food delivery market in Hong Kong is still growing, and we’re focusing more on groceries in 2024,” Deliveroo Hong Kong General Manager Nick Price said.
The remarks came as the consumer preference for food and grocery delivery, as well as pickup services, continues to rise even after the end of pandemic-related social-distancing restrictions.
According to its latest consumer survey from consulting firm Censuswide in November, two-thirds of 1,000 local respondents said they used food delivery services more often in 2023 than during the pandemic, as many are becoming increasingly acquainted with the ease and speed of the service.
Moreover, around 68 percent of those surveyed suggested they expect to continue or increase their use of delivery services in 2024.
The figures buck the trend of Hong Kong’s lackluster local economy and consumption.
In its latest quarterly macroeconomic forecast, the University of Hong Kong said that the city’s GDP will grow only 2.1 percent in the first quarter of 2024. The estimation for the year will be between 1.9 and 2.7 percent — lower than the 3.2 percent last year.
The Hong Kong Special Administrative Region government has been ramping up efforts to boost the city’s recovery by rolling out a vast array of measures, including the night markets held in various districts under the Night Vibes Hong Kong campaign.
However, the officials’ ambition is slowed by a key structural factor — “the large disparity in wages and prices between Hong Kong and neighboring Shenzhen”, said Vera Yuen Wing-han, a lecturer at the University of Hong Kong Business School.
Last year, 53.3 million travelers left Hong Kong for the Chinese mainland, more than two times the 26.5 million who came from the north during the same period, data from the city’s Immigration Department shows.
“Hong Kong people can now enjoy roughly similar services just a short drive away for a fraction of the price,” Yuen said. “Despite governmental efforts to reinvigorate local businesses, such as through the Night Vibes Hong Kong campaign, Hong Kong residents will continue to take advantage of cheaper services and goods nearby as their economy more closely integrates with the region.”
In this regard, food delivery services have a role to play. According to a report released by research firm Capital Economics, Deliveroo’s activities in Hong Kong in 2022 supported HK$4.1 billion ($524.25 million) of gross value added — additional economic activity arising from the platform’s operations — and 12,000 jobs.
“On top of the increase in economic activity, there are wider benefits to restaurants, customers and the economy from the operation of delivery platforms,” the research firm said.
The survey found that almost 57 percent of surveyed restaurants said that Deliveroo helped them develop their respective businesses. Also, one-third of Deliveroo’s restaurants said they were able to reach more customers, and 13 percent reported they were able to find new customers in formerly untapped areas.
Since its launch in Hong Kong in 2015, Deliveroo has partnered with over 10,000 restaurants and riders respectively.
Among the delivery platform’s moves to capitalize on the city’s growing market is the launch of its second rapid supermarket delivery service site in Tuen Mun — a residential area that logged a 100 percent growth in grocery sales from 2021 to 2022.
Price also suggested more discount campaigns are in the offing over the rest of the year.
Yet the company faces stiff competition. It merely took half a year for KeeTa — mainland-based food delivery giant Meituan’s sister app in Hong Kong — to seize an overall market share at 21 percent, according to Measurable AI. That compared with Deliveroo’s 25 percent and archrival Foodpanda’s 54 percent.
The ranking, which Deliveroo claimed as “misleading” given its sample size of less than 0.15 percent of total orders in November, also showed the new entrant, which doesn’t offer pickup and grocery orders, has already surpassed Deliveroo and become the second-largest in the food-delivery service business alone in Hong Kong.
