In China, younger consumers are driving growth in e-commerce sales, which leaves brick-and-mortar stores with the challenge of adjusting their retail strategies to keep pace.
Brick-and-mortar stores have transitioned from general retail stores into flagship stores showcasing the brand and giving customers a real-life experience, which is something online retail platforms struggle to compete with. However, through the seamless integration of omnichannel retailing, these offline experiences can contribute to the growth of online presence and drive sales.
China’s omnichannel market
China has emerged as the world’s omnichannel capital. As 82 per cent of Chinese luxury consumers use a combination of online and offline channels to make purchases, brands are merging their online and offline retail models to create flexible and gratifying experiences.
One of the first steps in the omnichannel process is seamless channel integration. This ensures consistency across the retailer’s physical and digital channels, such as uniform pricing and range.
Retailers wishing to succeed in China’s omnichannel market must enable consistent customer experience across various channels, as this enhances customer engagement. They must develop an omnichannel strategy with high interconnectivity across all channels. For example, many companies in China now provide in-store pickup for online purchases. This service requires the online sales function to maintain close communication with retail stores, so that when the customer visits a specific store, their orders and products are available for pick up.
In order to enhance customer experience, giving the customer a voice is also essential. Leading companies should create platforms such as discussion forums to allow customers to share their opinions with fellow customers. This provides unbiased reviews from previous customers, thus developing trust in the product.
The role of flagship stores
Flagship stores are an effective counter strategy in sectors where there is an increasing trend towards online channels. The DJI Shanghai flagship consists of two storeys and is built with European-style columns and glass windows, fusing art and technology. The Flight Area gives customers the opportunity to experiment with cutting-edge technologies and to enjoy flight demonstrations of the DJI drones.
In the DJI Story Corner, the DJI’s development history is projected on a curved screen. Lastly, the Product Gallery displays all DJI products with touchscreens for customers to learn more about specific products. This flagship store provides a unique and memorable customer experience and displays the brand’s history, all of which contributes to further promotion of the brand.
Brick-and-mortar design elements to tie in with online
According to data from QuestMobile, the number of monthly active users on mobile shopping in China reached 997 million in June this year, an increase of 15.9 per cent year on year. Since Chinese consumers are becoming increasingly savvy and demanding transparency, physical retail stores need to incorporate the latest technology into their retail design. For example, the Yves Saint Laurent store in Shanghai has added augmented reality screens that use facial recognition to enable customers to virtually try on different makeup looks.
E-commerce platforms have realised that having an online presence is no longer enough. Xiaohongshu (Red), China’s popular social e-commerce platform, attests to this phenomenon. Xiaohongshu launched its first offline store Red Home store in Shanghai in June last year. Interestingly, the staff who designed the store had no previous offline-retail experience. Rather, it was their years in online retail that led them to think outside the box when it came to the store’s layout, decor and technological integration.
Red Home has screens located throughout the store, designated for product reviews. Customers can bring a store item over to the screen, which will show review posts about that particular product on the Xiaohongshu app. The Xiaohongshu platform centres around a community who love to snap and upload photos of their lives online. With this in mind, the store aims to be a selfie-lovers paradise, contributing to what the brand hopes is the ultimate shopping experience.
Aside from Xiaohongshu, many other online retailers have expanded their offline footprint in order to improve brand penetration and further develop their brand. For example, Chinese smartphone and electronics brand Xiaomi now has 2000 exclusive Mi Stores across India as it aims to increase its presence in small towns and rural areas. According to Xiaomi India management, these stores will help the company reach its target of driving 50 per cent of sales offline by year-end. Xiaomi expanded into offline retail in India in 2017, and experts say it was this push that enabled the company to surpass South Korea’s Samsung as the top handset manufacturer in the country.
Overall, it is clear that in order to succeed in the Chinese market, retailers must seamlessly connect their online and offline stores, ensuring consistency along all channels and giving customers a completely unified shopping experience. By incorporating an omnichannel retail strategy into their design concept, brick-and-mortar stores can provide the ultimate customer experience and significantly increase their retail sales.
- Samantha Chalmers is client manager – Shanghai at 5 Star Plus Retail Design.