On the cutting edge: The evolving retail landscape in China


Feb 06 2020

China has long since been at the cutting edge of consumer technology, and the retail environment is no different. As early and willing adopters of technology, the Chinese consumer engages with retail businesses in a way that is vastly different to the rest of the world. With over 700 million internet users, it’s no surprise that technology, online services and the constantly connected culture has influenced the retail environment.

The sheer size of China’s economy coupled with the uptake of ecommerce and mobile technologies allow brands and retailers to test ideas fast, while harvesting infinite amounts of data. Additionally, the country’s unique cultural and political landscape enables more diverse and innovative ideas to reach fruition. This creates a dynamic environment allowing brands and retailers to thrive if the experience they offer stands out and meets the desires of their customers

1. A mobile-first approach to retail

China’s relatively relaxed regulations governing financial data and personal information has paved the way for the proliferation of mobile payment services in the market. Widespread adoption of these services is in part due to the Chinese consumer’s predilection for total connectivity, and there is certainly an appetite for technologies that allow consumers to conduct their life on-the-go, purchasing when and where they want to.

Mobile commerce has allowed for the Chinese consumer to become one of the most influential and valuable consumers in the world. While western markets tend to be geared towards Black Friday as a key day for retail, Singles Day which falls annually on 11th November is the largest shopping extravaganza in the world. On Singles Day in 2019, e-commerce titan Alibaba recorded $268.4 billion yuan ($38.3 billion USD) in sales at the end of the 24-hour period, dwarfing the $16.8 billion USD in combined sales spent on Black Friday and Cyber Monday in America.

Interestingly, Tibet led the country in mobile payment adoption, with the technology being highly beneficial for less populated areas lacking strong commercial infrastructure. While the country is becoming increasingly urban, a large proportion of the population still lives in rural areas, and the advanced mobile commerce and payment solutions enable the entire country to stay connected.

2. The growth of voice technology

The Chinese language lends itself to the practicality of voice recognition technology, with thousands of characters that can be difficult to write on small screens. In a country so focused on efficiency and productivity, voice technology has been widely adopted as a faster way to communicate. Companies such as Baidu are investing heavily in voice technology, with sales of the brand’s smart speakers having overtaken Alibaba and Google, second only to Amazon. Chinese brands of smart speakers are being sold at a relatively low cost compared to Amazon and Google’s products, allowing for an increased uptake in the market.

Voice activated technologies such as smart speakers have huge benefits for brands and marketers, with the devices being used an estimated 20-30 times a day for approximately 2 hour totals – higher than the average 65-75 minutes per day for Amazon Echo and Google Home devices. Smart speakers have been extremely popular in China’s smaller cities, with consumers choosing the devices as low-cost alternatives to traditional entertainment devices such as TVs.

China’s three largest smart speaker brands, Baidu, Xiaomi and Alibaba’s Tmall are each playing to their individual strengths to allow increased functionality for users. Alibaba’s Tmall Genie allows users to connect an Alipay online payments account and uses voice recognition to enable purchases, Xiaomi allows its speakers to act as a command hub for other smart home devices, and several brands are trialing voice assistant offerings. Voice technologies will likely be a goldmine of data for brands; however, revenue models remain unclear, with advertising having a negative effect on user experience and adoption rates. At this stage, the Chinese market is still in the process of adopting voice technology and changing user habits to integrate these technologies into everyday life.

3. Connecting the offline and online experience

The proliferation of ecommerce and mobile technologies does not mean retailers should discount bricks and mortar. Due to the sheer market size and vast number of brands and retailers competing for consumers, visibility and productivity are key. Retailers must deliver a consistent experience across offline and online channels, ensuring they are a convenient and attractive destination for their consumers.

Developments in AI technologies are increasingly allowing retailers to connect the online with the offline. Hema, Alibaba’s offline supermarket, uses AI technology to improve the consumer experience and their own operational efficiencies. Hema uses machine learning to identify demand for each product to more accurately guarantee physical stock, as well as to guarantee delivery within 30 minutes, by balancing multiple factors including traffic data, weather conditions and order requirements.

Physical retail space continues to remain important, with an increasing number of shopping malls looking to local brands to provide more relevant products to local shoppers. Pop-ups are common, but localized offerings such as local designer start-up brands and temporary markets are a worthy drawcard to shoppers, creating a community feel. Similarly, experiential retail is being used to turn malls into a destination to visit, with advanced technology being integrated into bricks and mortar spaces to enhance the consumer’s shopping experience and encourage them to share ‘Instagram-worthy’ user generated content on social.

As the world’s most populous country, significant growth opportunities exist in China for those brands and retailers who are achieving the right balance. At Tag, we enable our clients to stand out at the forefront of the rapidly changing retail environment. We work on retail campaigns across channels for global brands and facilitate translation and transcreation of marketing campaigns effortlessly across cultures and markets. Our work is backed with the knowledge of our team of global marketing experts as well as our local team in China, who have the capabilities to apply cutting edge technology in both the retail and digital spaces.

Schedule a call today to find out how we can help with your brand’s creative production and sourcing needs.

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