What Brands Can Learn from China’s Recovery

Chinese retailers are a couple of months ahead of Australia’s as the country relaxes its restrictions and attempts to get back to normal. There are a number of key trends emerging out of the country that Australian brands should consider as we cautiously approach recovery.

Worry free shopping

It’s understandable, but the lingering concerns over virus transmission are still in play in China and social distancing is still being followed. In this climate Chinese brands are finding they need to demonstrate a vigilant safety culture and hygiene standards to confidence and customers. The rise of the “worry free economy” is being touted by many as brands offer contactless delivery and enhanced online services including a continuation of live streaming and virtual appointments.

Down under, western and Chinese consumers will have the same concerns, particularly as our social distancing is set to last until September. As we chart a road to retail recovery Australian brands returning to the market should be considering how they meaningfully communicate a safety-first approach to operations and how they can pivot retail locations to offer more personalised touchpoints – think fewer people in store, but more meaningful contact and service.

Online always

In China we’ve seen a number of high profile offline only brands start to move into online, and quickly – Prada, IKEA and BMW all established Tmall stores during the epidemic, among others. This has particularly occurred as brands have sought to move back into sales mode during the recovery period. Digital strategies during the major infection period focused on adding value through information, education and entertainment (think the likes of fitness brands offering live streamed workouts, restaurants offering cooking workshops etc), and while brands haven’t dropped this approach as it has resulted in great engagement, they’re now selling more overtly and they’re doing that online. Retail foot traffic is coming back, but certainly not in the previous numbers. People are spending, but not crazy amounts. That means there are less buyers, more competition and so marketing needs to be effective and efficient.

In Australia we’ll start in a similar place – consumers will be conservative and cost conscious, while brands will be keen to start to move inventory. For brands it means thinking about your online to offline ecosystem – how you can continue to drive brand equity online through social, what is your D2C approach and how does that fit with any high street retail you might have. The key message? Digital isn’t going anywhere and if you thought you could get away with social media silence at the start of COVID-19, that isn’t going to work much longer.

Group buying

Ok, this trend isn’t one that has come out of COVID-19 but it is one that Australian brands should be considering anyway. Group buying became highly popular with the launch of Pinduoduo – one of the fastest growing e-commerce start-ups in China, meaning Together, More Savings, More Fun. It allows buyers to get deep discounts by getting friends to participate in group buys of items. Buyers have 24 hours to fill a group and the app shows the discount increasing as every new buyer joins.

The popularity of the concept has taken off and now many online retailers offer their own group buying deals on their platforms.

Australian brands can tap into this phenomenon by offering their own incentive based group discounts to local Chinese audiences to push more product in every sale. This can be achieved through platforms like WeChat.

The myth behind revenge spending

In the early days of China’s recovery many were hoping “revenge spending” by cashed up, and until then, locked down, residents would drive the early days of the recovery. And certainly early on the signs were hopeful. However, weeks in and the picture is one more so of cautious spending. Some numbers did suggest a boost to eating out and small purchases, but the luxury sector hasn’t ignited as some thought it would. The South China Morning Post found that Chinese consumers were planning on spending on groceries and clothes, but those luxury goods, not so much. Segments including health, finance and investment are also areas to watch.

In Australia, there is likely to be some kind of level of revenge spending, but this is likely to be similar to China – focused on food, fashion and small purchases.

All in all, when looking at China, what we can see is a clear desire to get back to normal, but that normal isn’t what it used to be. Safety is a huge consideration in the post COVID-19 world and is why digital and social will still be really important as buyers return to the market. Australian brands can check out Bastion Effect’s piece on how manage social media during COVID-19 here. Obviously when speaking to Chinese audiences there are different factors to consider, as digital channels and the habits and behaviours of users are wildly different. More on that to come in a future blog!