Avery Booker | 29 June 2015
In their new book “I F**KING LOVE THAT COMPANY,” authors Bayard Winthrop and Randy Komisar highlight how young, digitally savvy brands have steadily chipped away at the traditional brick-and-mortar retail model–which depended on size, scale, and distribution–and replaced it with one that values efficiency, speed, and dialogue to build loyalty and affinity among a plugged-in buyer base.
Exemplified over the past decade and a half by the rise of Amazon, Winthrop and Komisar write, the retail landscape developing around us is increasingly dominated by two types of brands: the automators (those that leverage technology to make shopping simple and friction-free) and the humanizers–those that leverage the Internet and social media to “create direct, personal relationships on a massive scale.” The authors deem this bifurcated retail landscape the “Post-Amazon” world.
The notable thing about Winthrop and Komisar’s prediction is that this “Post-Amazon world” is already the norm in China, and arguably throughout East Asia.
Accelerated by two key factors–an early leap to mobile and Chinese President Xi Jinping’s protracted anti-corruption crackdown–many Chinese consumers already expect brands to be both automated and humanized, responsive to their demands and efficient enough to get products to them quickly, discreetly, and cost-effectively.
The Leapfrog Effect
Right now, the brands that are truly connecting with Chinese consumers are those that understand how their brand can fit into people’s daily lives and schedules. But what does this mean? It means giving customers the tools to communicate what they want, buy it anytime, obtain it without going too far out of their way, and share good experiences to their peer group–all while gaining face and looking and feeling like a smart consumer. For any truly savvy brand, this should be a global policy, not just a strategy for China.
Chinese consumers already leapfrogged everything from voicemail to email, turning instead to WeChat to get both in a more efficient way, so it’s only natural that many are leapfrogging the traditional pathways of learning about brands and collections, and doing everything via platforms like WeChat.
One example of a brand using this to its advantage is Chanel, recently launched a WeChat microsite with the Chinese-language women’s magazine Femina to promote its new line of lipstick. The interactive microsite featured profiles of six local fashion, lifestyle, and travel bloggers, sharing their thoughts on how to find a lipstick color that best suits one’s personality. Another brand that has had success engaging young audiences in China is New Balance, which has been able to harness the power of user generated content (UGC) by encouraging fans to customize designs and share via WeChat and Weibo.
What has become important to younger Chinese consumers is feeling that they have a say in how brands do business. So maybe it’s better not to open your 20th brick-and-mortar location in China right now — instead, consider offering online-only collections or products, encourage fans to vote on limited-edition designs or colorways, and reward the influencers (normal fans with their own audience, not just professional bloggers) who spread the word most effectively.
The Post-Crackdown World
Having stretched on for more than two years, Xi Jinping’s anti-corruption crackdown is–in itself–no longer a scapegoat for poor performance in China. Plenty of luxury brands, among them Hermès and Céline, have seen demand grow amid the crackdown. What successful brands have in common, and what they’ve continued to do successfully, is change the nature of their activities inside China while simultaneously boosting them elsewhere (i.e., Europe and North America).
No matter what ultimately happens with Xi Jinping’s anti-corruption campaign, China’s Post-Crackdown luxury market will forever be more private, personal, and digital. Even if consumers stop worrying about who sees them enter an IWC store or Bentley dealership in Beijing, they’ll still prefer a more discreet shopping experience. (Half or more of which may take place online, with the store essentially just a place to research items pre-sale, then pick them up post-online-purchase.)
The challenge for brands then becomes reckoning with the reality of the market. If China-based staff continues to lean back on the anti-corruption crackdown as an excuse for flagging sales, that’s a red flag that they’re trying the same strategies that may have worked in 2011, but no longer apply.
Shoppers aren’t just traveling abroad to purchase luxury goods because they’re cheaper. It’s because the experience they get when shopping for luxury in China isn’t the same superb one they get when shopping for seemingly mundane things like personal care items.
In the “Post-Crackdown World,” the luxury brands that succeed won’t be the ones that use the same old excuses, throw the same old parties, and advertise in the same old magazines. It’ll be the ones that are capable of striking a chord with shoppers and making them feel important and listened-to. (All while targeting and reaching them on the devices and platforms they care about.)