Why Retailers Need To Be Looking At China For Inspiration

Brands no longer operate within a single market limited by borders, language and technology. The internet has been a major driving force behind globalisation, bringing people and cultures closer together. For commerce it created a truly global economy, fuelled by speed of transport, access to information and lower wage costs.

The Chinese economy has had explosive growth over the past 30 years, and as a result western companies are keeping a close eye on the innovative ideas already adopted within the retail sector.

Chinese Influence

With a rapidly growing middle class and a government pursuing heavy investment in technology, ideas that are now commonplace in China are only just starting to appear in the UK.

China’s biggest social media app, WeChat, has offered video calling, money transfer and Uber integration for years, something that’s only just appearing within the UK. With Chinese influence, the integration of well-established apps with other aspects of life continues to grow rapidly, for example Westfield shopping centres now have specific pick-up and drop-off points for Uber.

Looking to China, more than half of luxury consumers use their mobiles to research high-end products. In a market estimated to be worth $187bn by 2024 in China alone, high end brands are quickly adapting to become experts in the Chinese market. Taking note of specific cultural differences is an easy way to boost sales and avoid causing offence.

Luxury fashion has been fighting to keep up with the rapidly changing market, and we’re starting to see significant changes to the way the industry works. Traditionally luxury fashion has been split seasonally, into Autumn/Winter and Spring/Summer collections based on the seasonal split in the West. With a huge surge to the market coming from China, and the East in general thanks to a boom in middle class growth, brands are quickly realising that this current model doesn’t work.

Luxury brand Burberry have recently moved to a model of two season-less annual shows, with collections available immediately online and in stores. Not only does this suit the global demand for luxury goods, but also a direct response to the influence social media has had on the industry. In a world where everything moves quickly, and hype disappears with the refresh of an Instagram feed, plus Amazon’s effective delivery system upending e-commerce, immediacy is increasingly becoming a central tenant of thinking for retail brands in a world where consumers are just not willing to wait.

Fast Commerce

Several brands have taken advantage of the need for instant gratification fuelled by social media, a great example of which is online clothes retailer Boohoo. Their business model is built around their ability to replicate global trends from the runway and social media in a matter of weeks. By keeping production mainly within the UK for initial small runs of clothing, they’ve created a system whereby they can trial the success of items for an extremely low risk. With this scatter gun approach they can respond to the market instantly, and items that sell well can then be put into full production. Coupled with the use of Instagram influencers posting images wearing the items and measuring their audiences response, this model means they have a constant barometer of how their products are landing amongst their target market and an ability to be more agile in their control of their production costs.

Boohoo are definitely not alone in pushing fast commerce, as even for brands with long lead times and slow product development, the time between the product announcement and availability in stores is being squeezed to a minimum. Apple’s yearly October conference has huge hype and mass coverage of their products at these events. Conference to shop floor is a matter of weeks, leaving no time for hype to die down or for competition to follow suit with similar products.

Shopping days

One of the other main impacts of globalisation on the retail industry is undoubtedly the introduction of new discount days imported into the UK. Black Friday, Cyber Monday and Amazon Prime Day are here to stay, bringing with them massive competition and a media backlash on over consumption and wastefulness.

Singles Day, the biggest shopping day of the year, is for the most part largely unknown within the UK. Retailers are starting to wake up to the mammoth retail festival in China, which in 2018 saw a record breaking $30bn spent in just 24 hours. This presents a huge opportunity to boost sales in the APAC market, but also to the Chinese community in the UK. Research gathered from Global Web Index shows that compared to the rest of the population, the Chinese community in the UK are more than twice as likely to purchase the following online:

  • Shoes
  • Beauty products
  • Fragrances
  • Jewellery
  • Beer & spirits
  • Baby products

There’s a huge potential for UK brands to capitalise on this largely untapped retail opportunity, which no doubt will be filled over the next few years.

Key take-outs for retailers

  • A global retail market made possible thanks to the internet brings huge opportunities, both to make money and to get it wrong
  • China is ahead of the game for retail thanks to a huge push in technology, and brands are looking East for inspiration
  • Despite media backlash, shopping days are growing every year, with more dates being imported to the UK
  • Fast commerce is becoming the norm, fuelled by social media and speedy competition

Summary

A global retail economy presents huge opportunities for brands for capitalise on the ease of access to additional countries, many of which have a rapidly growing middle class and huge demand for quality goods. As these countries continue to develop economically alongside technological advances, brands are starting to look globally for inspiration. Access to a global market is not without drawbacks, as it means competition can be huge and there’s a big margin of error to get things completely wrong. Take D&G’s recent publicity in China for example, creating culturally insensitive video content that generated mass public outrage and a swift exit from the market.