There can be no doubts about the opportunity. According to a 2019 study by McKinsey, young Chinese consumers will account for 65 per cent of the growth in luxury fashion and accessories globally heading into 2025.
However, meeting their needs depends on brands being able to operate and deliver outstanding shopping experiences seamlessly across devices, channels and national boundaries using integrated retail technology and data.
WeChat and chat
WeChat has emerged as a social and commercial ecosystem within which consumers can manage their social and retail life: they can post, make calls, send messages, play games, pay bills, buy products and book taxis.
As a result, social commerce is no longer considered a separate shopping channel. WeChat, as well as Douyin and Xiaohongshu/RED are effectively blending e-commerce with social, and since the pandemic, more consumers are embracing them.
Some international retailers are taking advantage of this by getting involved in marketplaces that are central to the Asian market, notably Tmall and JD.com. WeChat introduced its Mini Programs to make things even easier; through this app-within-an-app, brands can sell direct to consumers using a shopfront, and take orders as well as payments though WeChat Pay.
Importantly, WeChat Mini Programs bridges the on/offline divide. International retail group Sandro Maje Claudie Pierlot (SMCP) developed a fully digitalised loyalty program in which the customer can enroll faster (20 seconds vs. three minutes) and view their tier benefits. Further CRM segmentation enables them to push tailor-made in-app messages. Clarins rolled out a Mother’s Day campaign encouraging users to leave voice messages for their mothers via its WeChat platform, with users who did so also qualifying for a gift at any Clarins store on Mother’s Day. At the Burberry flagship store in Shenzhen, customers can use the app to interact with the window display and play their own music in fitting rooms. Users can create their own profile using a cartoon digital avatar in the form of a fawn that hatches from an egg.
“Burberry has always been a brand of firsts, built on a belief that creativity has the power to open spaces. We test new ideas and push the boundaries of what’s possible,” Burberry CEO Marco Gobbetti said of the store.
“When it came to innovating around social and retail, China was the obvious place to go as home to some of the most digitally-savvy luxury customers.”
Removing friction from the buying journey
Burberry knows it has to remove all points of potential friction in the buying journey.
The Shenzhen store, created in collaboration with Tencent technology, is described as a “place of discovery”, a digitally immersive retail experience that invites customers to purchase items, access exclusive content and personalised experiences through social media platform WeChat.
During Covid, mobile payments actually grew and they are as much about the store as online. According to iiMedia Research, consumers most use mobile payments in food and beverage (69.5 per cent of the time), small bricks-and-mortar stores (69 per cent) and online shopping (65.3 per cent). In addition, mobile payments are also popular because they are contactless and therefore considered safer.
The store itself, after years of concern over its relevance in the face of accelerating e-commerce, has emerged stronger than ever because it has embraced the way people now shop.
Stores rise to the e-commerce opportunity
Physical stores are central to supporting every type of customer journey. For instance, during the pandemic in particular, some spaces operated as dark stores or mini warehouses to fulfil online orders. Some brands emphasise experience rather than direct sales in order to bring consumers closer; others give customers access to the widest possible range of goods through digital catalogues for in-store online ordering (endless aisle).
In 2019, Chinese food delivery app Meituan Waimai introduced indoor robots and drones for delivery, but in 2020, they added autonomous electrical vehicles to travel the public highways to send grocery orders to customers in Beijing. Robots have the advantage of enabling no touch across the whole buying and delivery process; another factor to consider as consumers look to keep safe post-pandemic.
The technology-enabled store
Physical stores rise to consumer demand because of their strategic location advantage, comprehensive stock pools with rapid fulfilment capability and service capacity. It therefore continues to act as the core touchpoint between brands and their customers, and smart retailers have been introducing technology that removes any remaining barriers to those customers getting the experiences they are looking for.
Building experiences that work on any device and any channel depends first and foremost on a single and real-time view of stock. Endless aisle, store as warehouse, click-and-collect, showrooming — all these cross-channel models depend on brands knowing the location and status of stock.
In terms of the technology to enable this, it is important to strike a balance between global and local. The likes of Lacoste, Longchamp, Aesop, L’Oréal and Shiseido use a solution that has been localised to address the retail practices fiscal/regulatory framework and cultures in each territory, particularly China’s cybersecurity regulations. At the same time, tech solutions are globalised in order to ensure brands can manage their global retail estate using a single solution worldwide.
In Asia generally, but China in particular, local knowledge and relevant technology are critical to ensure fiscal, regulatory and data storage compliance. Based on the regulation that all transactional data must not leave China, Cegid opened a new cloud data centre (Point of Delivery) there in 2021 in compliance with China’s ever-evolving Cybersecurity Law.
“The innovation we are seeing in Asian retail stores and their adoption of technology to delight the omnichannel consumer, are fast emerging as a blueprint for countries in both Europe and the US,” says Marco Lim, Cegid’s Head of Solutions APAC.
Any doubts as to the value of the store for Asian consumers comes with news that for Q1 2021, groups such as Hermès and LVMH posted results up between 25-43 per cent, largely driven by China and in some cases higher than before the pandemic.
This was originally published in the Asian Retail Outlook, sponsored by Salesforce. You can download the report here.
Sylvain Jauze is Director of Retail Worldwide Sales and International Operations at Cegid, a leading retail software provider servicing 1,000 luxury and specialty retailers globally. cegid.com/en