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GUEST ANALYSIS What UK retailers can learn from China's retailers in the face of coronavirus

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GUEST ANALYSIS What UK retailers can learn from China's retailers in the face of coronavirus

The coronavirus is the most serious threat to China’s retailers since SARS in 2003

 

Malls are closed shut and the streets of Beijing and Shanghai are near empty as residents stay home.

 

And yet this time around brands have more digital tools than ever before to reach customers at home. We take a look at what brands and retailers are doing and how UK retail can learn from them.

 

Chinese smart supermarkets use omnichannel to reach customers

Smart grocery store chains in China such as Alibaba’s Hema (recently renamed as Freshippo), Tencent’s Super Species, and JD.com’s 7Fresh have all seen abrupt increases in orders through their on-demand delivery services, which can be accessed through mini-apps on WeChat.

 

Super Species’ WeChat ordering app Source: Screenshot official WeChat mobile app
Super Species’ WeChat ordering app Source: Screenshot official WeChat mobile app

A spokesperson from Hema/Freshippo noted that it is prepping six times the amount of fresh vegetables for its 50 stores in Shanghai, equivalent to 330 tons of groceries. JD Daojia, JD.com’s on-demand delivery service platform which services the likes of Wal-Mart and JD’s own grocery stores, has also seen a fivefold increase in sales.

 

Here’s what a typical omnichannel grocery store chain is like:

 

Cafeteria with healthy meal options

Each store has a cafeteria with imported foods such as sushi, Australian beef, and salads to appeal to Chinese millennials in Tier 1-2 cities looking for healthier meal options. Cheap 50 RMB (5.58 GBP) meals drive traffic, as customers may come in during lunch hours or after work for a quick bite.

 

Offline retail small store layout

Grocery stores are made deliberately small with a limited number of popular SKUs that procurement teams can buy at cheap, bulk prices. Customers don’t have to spend a long time looking for items and the small-size layout enables the chain to afford real estate in prime locations, driving high quality foot traffic from nearby office buildings

 

Online WeChat mini-program store and on-demand delivery services

For customers that don’t want to go to the store and/or forgot to buy an item, they can order whatever they want on the retailer’s WeChat mini-program store; each supermarket can deliver groceries to one’s door within an hour. However, delivery is typically limited to a 3km or 5km radius. Such a model works well because WeChat is integrated with WeChat Pay, and delivery addresses and other info can be saved within the mini-app, meaning that orders can be completed with just a few taps of the finger.

 

Since everyone in China is staying inside to stay away from the coronavirus, the only way for them to get food is through these on-demand delivery services, which explains why demand has skyrocketed. While food & grocery delivery services have taken off in the West, it has scaled at a slower pace due to higher labor costs and more regulatory restrictions. China also benefits from more densely populated cities which makes delivery services more cost-efficient.

 

Using livestreaming to reach Chinese audiences

As fashion shows around the world are being canceled due to coronavirus fears, luxury fashion brand Dior is doubling down on its digital marketing efforts to maintain a relationship with Chinese followers.

 

On February 25th, Dior livestreamed its Fall 2020 fashion show in Paris on Weibo, China’s Twitter-like platform. The livestreaming session began with a short behind-the-scenes clip, interviewing designers and models preparing for the show. The campaign attracted over 10m viewers, and over 100m users liked or commented on the campaign’s Weibo posts.

A video post on Dior’s official Weibo account. Source: screenshot official Weibo website
A video post on Dior’s official Weibo account. Source: screenshot official Weibo website

Alibaba-owned Taobao Live also reported a 110% increase in livestreaming sessions in early February, compared to the same period a year before. The difference here is that on Taobao Live, customers can make purchases during the livestreaming session by clicking on the product link and paying with Alipay, which is integrated with Taobao. For FY 2019, it recorded a whopping 100 billion RMB (GBP 11.15 billion) in livestreaming ecommerce sales.

 

Livestreaming content has become a major part of ecommerce in China as brands and retailers look for more ways to connect with the end customer. As the coronavirus forces more people to stay home, there are now more hours in the day for content creators to reach them.

 

Small businesses in other verticals are also doing livestreaming. Real estate agents are giving virtual apartment tours, chefs are giving cooking lessons, and auto dealers are even showing off cars to potential customers. The coronavirus has shown that livestreaming video is becoming a bigger and bigger part of the consumer retail in China.

 

 

Retailers use WeChat to reach audiences stuck at home

Some retailers and brands are also using social selling tactics on WeChat to reach their customers. China’s largest sportswear brand Anta Sports is reportedly incentivizing idle employees with sales commissions to market and sell products to customers online.

 

It has given 30,000 employees and distributor partners individualized QR codes on WeChat that they can share with potential customers. The QR codes, which direct customers to the brand’s e-commerce store on WeChat, track how many sales each employee can make and gives them a percentage cut of each transaction.

 

An Anta Sports store in Shenzen. Source: Shutterstock
An Anta Sports store in Shenzen. Source: Shutterstock

Many are adopting the use of “private domain traffic”, in which store employees create their own private traffic pools in WeChat groups, each of which can fit up to 500 members. Within these groups, people are more likely to see promotions and interact with salespeople, as opposed to public posts on social media or email marketing.

 

Group messaging in WeChat results in more customer interaction than email marketing, because in China people are less likely to use email as a form of communication. WeChat also enables the viral spread of information and products, as users can easily share promotions with family and friends.

 

Key takeaways

  1. Smart grocery chains in China are using integrated WeChat mini-programs to offer on-demand delivery services for customers. Because of this, customers no longer have to leave their apartments to buy groceries.
  2. Livestreaming is also a common marketing tactic to reach customers quarantined at home. Alibaba’s Taobao Live has seen a 110% increase in livestreaming sessions when compared to the same period last year, and Dior livestreamed the launch of its Fall 2020 collection on Weibo.
  3. Other brands and retailers are using private WeChat groups to send products and information to top customers. Anta is incentivizing over 30,000 of its idle employees and distributor partners with commissions to sell products on WeChat.

 

Elena Gatti is MD, Europe at Azoya

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