Start the weekend with a nibble!
Category
Chinese apparel brand La Chapella reported that the company’s business spiraled to a loss of RMB 565 million in the first half of 2019. During the same period,2,400 brick and mortar stores were closed nationwide. Click for more…
INSIGHT & IMPLICATION: After going public in 2014, La Chapella has grown to 9448 stores in 3 years. The revenue peaked in 2018 with 26.17% growth. The brand was expected to become the “Zara of China” but failed to maintain its popularity in the mass market. A lack of an effective online presence is speculated to be one of main reasons for the loss. 42.6% of La Chapella revenue comes from mall counters, 41.6% from flagship stores and only 13.4% from online sales. La Chapella is now changing its business strategy by investing into its membership program and collaborating with various artists to attract younger consumer groups. Brands need to make sure they remain agile and ensure that digital business opportunities are a part of their overall strategy. This is not only a responsibility of the marketing department, but of the whole company.
Consumer
According to global consulting powerhouse McKinsey, 63% of Chinese consumers research online then buy offline in 2019 – a significant rise from 31% in 2017. The study shows that 81% will conduct a purchase after research – either in an offline retail location or via an online store. Click for more…
INSIGHT & IMPLICATION: In-store experience, a key part of the consumer journey in traditional retail, has been taken for granted in recent years due to the rise of eCommerce. However, in spite of the strong growth of eCommerce, most retail purchases are still happening offline which is why this experience should not be neglected by brands. When shopping in physical stores, Chinese consumers usually search for information about product and price, read reviews, look at sales volume and alternative purchase methods through mobile. This does not mean that consumers will necessarily choose to conduct a purchase online. This is why brands and retailers should take into consideration New Retail principles that digitize offline retail and provide a seamless omnichannel experience. For example, brands can provide QR codes not only for in-store marketing purposes (e.g. to download a coupon), but also to offer more information about the product, an easy way to learn about other product lines and repeat purchases.
Culture
A study conducted by TMall and Bain & Co revealed that sales of premium cosmetic brands increased by 8.5% among urban white collar workers, 7.3%among Gen Z consumers and 7.1% among lower tier youth from 2016 to 2018.The number of cosmetic brands used per capita also increased by 14.8%, 23.3% and 20.5% respectively. Click for more…
INSIGHT & IMPLICATION: Appearance (颜值) is the new social currency in China. Consumers care about how they look so much that even Alipay’s facial-recognition payment system was compelled to offer an image filter as part of its technology. One of the most popular KOL categories on short video platform Douyin is ‘Good-looking’ (颜值类) and refers to young, good-looking teenage girls or boys without any discernible talent, like singing or acting. Their followers like them because of how they look and are willing to pay to engage with them and purchase their merchandise. The importance of appearance ultimately represents a significant business opportunity for brands, but only if they succeed in creating a meaningful, authentic connection with their audience. Beauty aspirations of these consumers should not be seen as superficial, but as an important element of personal and professional success.
Media
Since the Pinduoduo in-app game ‘Fruit Garden’ was launched in 2018, the number of daily active users (DAUs) playing the game has increased to 50 million as of Q1 2019. The platform is rewarding 500 tons of fruit every day to those who have completed in-game tasks. Click for more…
INSIGHT & IMPLICATION: Pinduoduo has cleverly increased user retention and Gross Merchandise Volume (GMV) by leveraging an in-app game to engage with users and improve platform operations. From a consumer perspective, this gamifies the online shopping experience, helps contribute to society (the platform buys fruit from farmers and gives it away to platform users) and offers rewards. For the platform itself, the benefit is an enhancement in the overall shopping experience and the perception of Pinduoduo’s brand image. Alipay’s ‘Chicken Farm’ and ‘Ant Forest’ are similar features to the ‘Fruit Garden’ and brands should understand what their role can be in enhancing this experience even further, while ensuring they achieve their business, marketing and CSR goals.
Have a great weekend!
