'Lifestyle Centres': What Every Brand Selling in China Should Know About
If you believe the press, there is only one show in town for selling your wares in China - ecommerce. Yet behind the hype, ecommerce accounts for just 15.5% of retail overall, and an even smaller percentage for categories such as food and luxury. That leaves over 80% of goods bought through the good old brick and mortar stores - albeit a very fragmented network, and one growing at less than half the pace of ecommerce. Even Mr. Ecommerce himself, Jack Ma has said "pure ecommerce" will soon vanish, replaced by more holistic retail strategies.
That's not to discount the influence online shopping and China's overall digital sphere is having on traditional retailing. 61% of online consumers start their product research on an ecommerce platform according to PWC and it is a vital touchpoint in the customer journey of both online and offline shoppers. Yet it's about time the downtrodden shopping centre got some rightful airtime.
One of the positive outcomes from ecommerce's disruption is that it has forced traditional retailers to up their game. That, with a host of other factors, has seen China's retail space evolve to something unrecognisable from as recently as 2013.
China's most successful shopping malls have become 'lifestyle centres', drastically changing their tenant mix and crafting a much nicer experience for shoppers to maintain a point of difference over the oft-cheaper and better ranged screens of the ecommerce stores. A typical centre in China is up to one-half food and beverage and can have cinemas, ice skating rinks, spas, gyms, children’s play places, language schools, bowling alleys, horse riding centres on the roof, indoor beaches, and amphitheatres and other areas devoted to public events.
The most savvy physical retailers also integrate online strategies to attract shoppers to their stores. One example is the popular utilisation of key opinion leaders to help build buzz for physical stores through their digital channels, be present at stores to wow shoppers and offer incentives to fans that can only be redeemed at the stores.
Distributors can often be incredible assets to get products into stores. Whilst they are likely to reassure you that they offer full digital marketing strategies and services, few have deep literacy in digital marketing and nouse to fully capitalise on the opportunities the channel brings. Many don't even have a true view of what consumers are seeking, as some recent Australian research into the common nectarine recently discovered.
Any retail, tourism or services brand selling in China can learn from the way successful brick and mortar retailers have evolved to understand current Chinese consumer preferences. The moral of the story: physical retail should be a key pillar in most China strategies. Yet few bricks and mortar strategies will be successful without a robust and differentiating digital strategy to support it. Agencies such as China Skinny can assist with that.
Here are this week's news and highlights for China:
Chinese Consumers
How China's Shopping Malls Survive And Thrive In The E-Commerce Age: The lifestyle centre, art mall, experience-oriented plaza, whatever you want to call it, is now a staple in the Chinese brick and mortar shopping scene. There are five main drivers behind the transition from traditional retail centres.
How to Use New Retail Online-to-Offline Marketing with China Influencers: 70% of high-end purchases are influenced by online interactions, but well under 10% of purchases are made online. Utilising KOL channels online can help drive foot traffic to stores by creating awareness and buzz, providing fans with meet and greets, and KOLs offering incentives and coupons that can only be redeemed in store.
Food & Beverage
What’s Behind China’s Unquenchable Thirst for Bubble Tea?: Bubble tea: creamy, sweet, flavoured tea with chewy black tapioca pearls bobbing at the bottom of a tall cup has withstood multiple food safety scandals and attracted millions of yuan in investment since mid-2016. It’s a mouthful of tea and chewiness all at once and unlike fresh tea or coffee - both a drink and a snack. Viral marketing, recipe innovations and a push to create modern teahouses that have become hangout spots for millennials has got China’s urbanites chugging bubble tea.
Nectarine Harvest: White is All Right and Yellow is in Favour: Until recently, China-based importers had instructed exporters of Australian grown nectarines there was demand only for low acid white flesh nectarines. However, research by Agriculture Victoria’s Bruce Tomkins found while Chinese consumers preferred the sweetness of white subacid nectarines over the high-acid yellow nectarines, they preferred the appearance of the latter variety. Research also showed a big preference for soft fruit, different from what importers had said.
Mum & Baby
Under Pressure: Chinese Full-Time Mothers Demand Time Off: More than two-thirds of mothers in China work full-time, with modern-day mums attaching great importance to having a job, creating a stigma for stay at home mums. Post-90s are more likely to want to be full time mums than post-80s and other generations, with the number of full time mothers on the rise overall.
Chinese Tourists
The Road Ahead in China: "China is an authentically mobile society and in the travel context companies there have successfully used technology to automate payments and customer service within native mobile applications" - Skyscanner.
Health & Beauty
Big Pharma Gets Boost as China Speeds Up New Drug Approvals: Beijing has announced new rules that will speed up approvals of medicines and medical devices, easing bottlenecks in introducing new treatments. Data from overseas clinical trials will now be able to be used for drug registrations in the country removing the need for manufacturers to conduct added tests in China after receiving overseas approvals and will likely cut delays in the launch of new drugs by several years.
76% of Urban Chinese Consumers Say They Have Developed a Habit of Doing Sports and Fitness Activities: Aside from physical fitness, urban Chinese consumers are also paying close attention to healthy eating. In terms of reading food labels, symbols (eg organic certification) and short, punchy claims (eg free from known harmful elements) seem to have grabbed more consumers’ attention compared to standard nutritional tables according to Mintel.
Beautification Obsession: An estimated 14 million Chinese will have cosmetic surgery this year - 42% more than last year.
How Estée Lauder Is Making Its Global Brand Locally Relevant in China: Estée Lauder's strategy to appeal to constantly evolving consumers on WeChat and Weibo, o2o and KOLs and its Tmall and own online store saw its China revenue grow 40% in the fourth quarter.
Sports
First look at China’s Lionel Messi Soccer Theme Park: The $200 million theme park in Nanjing will have various soccer-themed immersive exhibitions and live performances featuring holographs and robotics and cost $41 to enter - slightly less than Shanghai Disneyland. It will chart 30-year-old Lionel Messi’s journey from his hometown of Rosario in Argentina to the top ranks of international soccer.
The NBA is the Most Popular Sport in the World's Biggest Sports Market for a Reason: According to one recent study that measured online engagement, the NBA is six times more popular in China than the three largest European soccer leagues combined. During the 2017 NBA Finals, more than 190 million Chinese streamed the games on their mobile devices. By contrast, in the US, each Finals game averaged 20.4 million viewers, and an additional 430,000 live-streamers. NBA's massive growth in China has been 'beyond what anybody could have anticipated'.
Banking
As China Piles on Debt, Consumers Seek a Piece of the Action: Since 2011, household debt as a percentage of GDP has dropped in the US, Britain, Japan and Germany to mention a few, but almost doubled in China, with the rates fast closing in on Germany.
Cars
China September Auto Sales Rise 3.3% on Demand for Premium Cars: China’s passenger-vehicle sales rose for the fourth consecutive month in September to 2.34 million units. The proportion of motorists in China indicating intention to buy premium cars jumped sharply this year, reflected in 30% sales growth for Volvo and 11% more deliveries for Mercedes.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
