Why Online and Offline is a Must to Meet Chinese Consumers' Retail Expectations

For years, people have been talking about ecommerce causing the downfall of bricks & mortar stores. That chatter only intensified when Covid hit. But the reality is far from it. By July 2020, while much of the world was just getting their heads around the pandemic, China was through the worst of the pandemic and retail foot traffic had returned to pre-pandemic levels. Even in the US, physical store openings will exceed closings this year for the first time since 2017, reflecting changing views about their power to drive sales.

Online shopping provides some experiences that can't be matched in a physical store, but it still doesn't come close to the tactile and intimate social experience of being in a physical store. That is particularly pertinent at present as other means of having such experiences - such as overseas travel - remain off the cards. On top of that, the soaring costs of acquiring customers online, coupled with last month's introduction of China's personal data protection law, has made wooing customers online harder than ever.

Yet, just opening a good old traditional store is no panacea for rocketing sales in China. The shopping experience needs to be top-notch to lure consumers away from the addictive flashing screens of their mobiles.For most Chinese consumers, shopping decisions are not 'either-or'. Depending on their needs at the time, they may shop online or may go to the store. But they want their experience to be consistent and integrated wherever they are.

The prevalence of scanning QR codes in bricks & mortar environments, means that loyalty programs, payments and other experiences can be seamlessly integrated with smartphones. More physical stores are enhancing experiences through tech-driven features and livestreaming, but also through physical forms such as workshops and event spaces, which are also integrated through tech. 82% of venture capital invested into Chinese offline retail store openings last year was directed at retailers who were integrated online and offline.

Professor Barbara Khan from the Wharton School of the University of Pennsylvania, acknowledges how Chinese retail is leading the world. Her research has found that western retailers have been successful if they either "make it more fun, more pleasurable, more trustworthy, or they take away the pain." In the past, being the best in one of those four quadrants was enough.

For example, Amazon addresses the pain through efficiency, allowing shoppers to get what they want spending as little time as possible on the site. But as retailing has become more competitive, retailers are needing to cover more than one of Khan's quadrants. Chinese retailers are already doing a great job at this. Alibaba, for example, addresses the pain points like Amazon, but it also adds a lot to make shopping fun.

Khan rightly notes that the rich online and offline retail experiences in China has consumers "seeing shopping now as a pastime, as entertainment, not just about acquiring things, but also being entertained, learning all sorts of things. And along the way, making some purchases.

"That sentiment is great news for marketers, but it also means that consumers have high expectations for their entire customer journey. They want more than just a transaction. Just slapping a QR code in front of a visitor is unlikely to create happy customers and will miss opportunities to build advocates as many restaurants are finding.

Consumers want experiences that are fun, meaningful and connect with what is important to them. It doesn't always need to be a high-tech augmented reality game, but could be as simple as recognising the importance of pets, such as Heytea, Naixue Tea and then Starbucks who let owners bring their furry friends to some cafes.

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