New retail in China
The Chinese market is in the midst of a raging development. The Chinese consumers demand constant innovation and are fast adapters of new technology. Back in 2016 Alibaba’s founder, Jack Ma, predicted that on and offline retail and logistics would merge into a new and dynamic structure called “New Retail”.
Over the years, Chinese consumers have shiftet their spending habits towards increased online shopping, resulting in e-commerce rising against the trend of overall economic downturn. The growth in online retail has been further accelerated by COVID-19, as many users who were not yet fully digital made the transition from offline to online shopping and adopted new interaction habits. This shift is unlikely to be reversed. You can see this trend in the numbers: over the past eight years, the share of e-commerce in total retail sales in China has risen from 10.6% to 27.2%.
Countless examples of this has since then developed, and China today can give us a glimpse of how the future of retail might look in Denmark.
User-centric approach
New Retail is fundamentally all about a paradigm shift in retail. Rather than drawing consumers into physical stores, the focus is on establishing a brand presence where consumers naturally engage. This shift involves integrating consumers into the storytelling process and making them active participants in product optimization and development. Within this framework, customers are seen as co-creators, actively shaping the products they consume. The act of purchasing a product is just one phase within an ongoing customer journey, spanning from initial concept to consumption and onward to referrals. Retailers have expanded their focus beyond single in-store transactions, striving for a seamless and integrated connection with customers across various channels.
Every touchpoint must be viewed as a potential interaction between consumer and brand. Sometime these interactions are purchases and sometimes not, it could for example also be as simple as social media interactions. Achieving this user-centricity at the core of a retail strategy requires a data-driven approach. Utilizing social CRM systems, it is possible to collect user behavior data across channels and platforms. Data makes it possible for brands to give consumers a 100% personalized experience by creating communication based on all previous interaction between the consumer and brand.
This personal experience makes it easier for brands to recruit consumers to become brand ambassadors. By sharing the brand and its content on social media consumers can help brands build up a complete eco-system around the product and experience.
Consumer journey – start phase
In the initial phases of establishing a brand in the Chinese e-commerce landscape, leveraging the unique strengths of individual platforms is crucial. This approach allows for the creation of a seamless consumer journey, spanning from exploration to sales to loyalty. The ultimate goal is to create a unified brand experience across various channels and platforms.
To gain a competitive edge, it's essential to start promoting the brand on popular social media platforms like WeChat, Weibo, Xiaohongshu, Douyin, and DianPing. This helps potential customers discover the brand. Once the brand gains visibility on these platforms, it's crucial to focus on maintaining a strong presence both online and offline to boost sales. As the sales start to pick up, it's equally vital to consistently engage with the audience on WeChat. This ongoing interaction helps customers stay connected with the brand, fostering brand loyalty and creating a unified brand experience for the costumer.
Consumer journey – mature phase
As a mature brand that have already created a streamlined user experience, it should be the goal to use the full spectrum of platform functionalities. In this way the consumer will be met with a complete experience wherever they encounter the brand.
hummel – Consumer touchpoints across all platforms
Let's take a closer look at how hummel, a renowned sportswear brand, has successfully implemented New Retail strategies in the Chinese market. No matter where on the Chinese online eco-system the consumer encounters Hummel, they will be met with a brand expression adapted to the unique strengths of the individual platform.
For hummel, it's not just about selling products; it's about creating a seamless and engaging experience. The Chinese consumer's tendency to visit multiple touchpoints before making a purchase decision highlights the importance of maintaining a consistent brand look and feel across platforms.
By strategically harnessing the benefits of different platforms, Leaf Digital has not only increased hummel's online presence but also cultivated a pervasive consumer touchpoint strategy that spans across all digital channels. Leaf Digitals expertise in navigating the dynamic digital landscape, combined with a data-driven approach, has empowered hummel to stay ahead of market trends and maintain relevance. As can be seen in the graph below hummel has utilized the benefits of the different platforms and have consumer touchpoints across all platforms.
One essential element of hummel's successful New Retail strategy in China is its presence on Tmall, one of the largest e-commerce platforms in the country. For Hummel, Tmall is not merely a sales channel; it plays a multifaceted role in their branding strategy, aligning with the principles of New Retail. Tmall serves as more than just an avenue for purchases; it functions as a platform where consumers can verify the authenticity of brands discovered on other platforms and gather additional information about those brands. This is a critical aspect of building trust and credibility in the Chinese market.
Tmall serves as a dynamic platform that offers a wealth of branding opportunities. The creation and maintenance of a Tmall flagship store are not isolated efforts; they constitute an ongoing project. To truly succeed in the dynamic Chinese market, staying consistently on-brand is paramount. This commitment is reflected in the crucial involvement of headquarters in the day-to-day operation of their Tmall flagship store, ensuring that every interaction aligns seamlessly with their brand identity and the principles of New Retail.
Navigating Chinas new retail landscape
Navigating the dynamic online landscape in China requires a deep understanding of its unique ecosystem, distinct platform strengths, and evolving consumer behaviors. Initially, brands should strategically leverage platforms like Tmall for sales, WeChat for branding and service, and Weibo/Xiaohongshu/Douyin for advertising to establish a strong presence. However, as a brand matures, it becomes imperative to offer a comprehensive experience across various channels, ensuring consistent brand expression. Success in the Chinese online market hinges on this multifaceted approach that adapts and thrives within its distinctive digital terrain.