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Jean Révis
À savoir | 9 mai

How to reinvent luxury shopping
Making clients come back: the dilemma of luxury shops in China.

 © SKP
Before getting to the heart of the matter, a little reminder of the context:
  46% of luxury products sold in the world in 2015 were sold to Chinese people;
  the recent financial crisis only had a limited impact on luxury consumption;
  middle classes keep growing in unknown proportions for us (dozens of millions of Chinese inhabitants get there every year);
  but the domestic market growth of luxury products is not what is used to be: -2% in continental China (but +10% abroad);
  investments of luxury brands in China have thus become very cautious.
  the Chinese client is hyper-connected, to identify his or her next purchase as well as to carry them out.
  but parallel-imports linked notably to the online system and to the government’s ambiguity regarding that matter is a real challenge for retailers.
In this context, the question is simple: how can one bring back Chinese clients in luxury shops in China?
The answer is not as simple, but here are a few clues. We will put aside the decisions regarding the price-gaps between domestic China and the rest of the world, which brands are progressively reducing to limit all the current interferences.

1-(Trying to) Understand the consumer

Let us pick our fights and remember three things • An educated luxury client, demanding, knowing the brands, collections, and often frustrated because of the feeling that they cannot find the most iconic products in domestic shops;
• A client who is thirsty for culture and for whom luxury brands are a source of knowledge, decorum, personal valorization – loving a luxury product, alright, but also knowing why it becomes a must-have;
•A luxury client who demands the research of experience: during the shopping itself, which they are expecting regarding what they can experience when travelling, but also in their hobbies with a notable growing interest for gastronomy.

2-Reinventing the mall

It is always impressive to see that in a China deprived of its architectural patrimony – and of the pleasure of strolling that goes with it – because of a frenetic urbanization, with a more limited cultural offer than for us, shopping is a full-time activity, alone, with friends, colleagues, family, during the week or the week-end, at lunchtime or after a workday, and at any age. And yet, although the consumer has changed, the mall remains in most cases a standardized, impersonal experience, where brands are the only “stars”.
Two experiences present interesting innovations:
•SKP in Beijing, the leader, which is reborn with a remarkable success and distinguish itself by a pioneer hybridization between a mall and a big store, where big multi-brand thematic areas (beauty, shoes, contemporary fashion….), a food-track through the different floors, exhibition spaces around fashion and a limitation of the brand shop’s size in the “mall” part create a diversity in the atmospheres and a uniquely rich offer;
• IAPM in Shanghai, chooses another option: betting on a particular type of clientele, in this case young adults, and offering in the mall a selection of brands, animations, entertainments entirely directed at this target. With an architecture symbolizing this very contemporary vision, latest-trend movie theaters and a strong presence of trendy brands, the bet seems to be won when you see the impressive attendance in the overloaded Shanghai.
 © SKP

3-Reinventing the shop

Or actually what is happening inside. There, again, three important points:
• the service, which must align on international standards. Too many brands, overtaken by the “easy” years’ client flows have not updated their sellers, their selling routine, or their CRM;
  the storytelling: in a recent focus group at Xi’an, clients (sometimes VERY wealthy) clearly said they were looking for sellers that are experts in their brands, capable of talking about it and of learning the products’ details that make them exceptional. Ideally taken over by a discreet and educative storytelling, like Loro Piana did for instance;
  the products, where the selection has to take into account the important knowledge of the clients, and present what will be for them the proof that the brand offers them the latest, strongest and most creative product it has.

4-Making space for digital

And benefit from the incredible possibilities it offers by bearing in mind:
  that Wechat is the first sale adviser and that sellers have to build beyond their usual routine;
  that the shop is not just a transactional place and that the online purchase it induces is an opportunity for the brand – they will happen no matter what and sometimes beyond borders;
  that CRM and clienteling must be adapted to the Chinese customs and integrate social networks, their practices (rhythm, prescribers, personalization…) but that the Chinese client is a priori claimant, luxury or not.
If each of the topics tackled individually is a piece of work in itself, it is here complicated by the multiplicity of actors (malls and brands) and for every function in the firm: all the levers of retail are involved. But now that the party is over, and that we must go back to work, there is no doubt that Chinese practicality will find a rapid solution to allow the El Dorado of shopping to be born again, reinvented.
Jean Révis
Associé Fondateur MADnetwork
Jean Révis a co-fondé MADnetwork en 2009. Ses plus de 40 séjours en Chine sur les 3 dernières années, une équipe de consultants chinois et des clients locaux de premier plan font de MADnetwork un observatoire privilégié du retail en Chine.
Crédits photo : SKP, DR
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