Next week sees the Year of the Rooster end as we embrace the Dog for the next 12 lunar cycles. Chinese regard the dog as an auspicious animal, one that is loyal and honest much like the wolfhound companion of the Chinese god Erlang. If a dog happens to come to a house, it symbolizes the coming of fortune. Yet anyone who has spent time in China will know that finding fortune takes a little more than a visit from a pooch.
Many of the trends we forecasted last year are still very relevant to finding fortune in China, but rather than repeating these, here’s a roundup of the 10 new trends that China Skinny expects to be the most relevant for brands and marketers in the Year of the Dog ahead:
1. Convenience 2.0
Convenience stores have long been among the fastest growing retail channels in China due to urbanites lives becoming increasingly busier. Convenience store grocery sales will grow 13% annually until 2025 according to Bain. Yet for Chinese consumers, expectations of convenience – fāngbiàn – are far greater than popping down to the local mart for a quick snack. With disruptive plays such as ecommerce, mobile payments and food delivery now mainstream in China, brands and retailers who don’t have a convenient end-to-end experience will fast become irrelevant.
Every touchpoint needs to be simple, digitally available and consistent across channels. Product and brand information should be easy to access and find. Avoid painful checkouts and long archaic queues (unless they’re fashionable like cream cheese tea) to appeal to an ever-less-patient Chinese consumer. There isn’t a category that won’t be affected, so we’d recommend a customer journey audit and rethink of marketing and processes.
Busy Chinese consumers are becoming less inclined to have the patience to queue and are seeking more streamlined, convenient and digitally-integrated options for their customer journey
2. New Retail is a Must-Have
Following on from convenient consumption, New Retail will marry convenience with experience, on the back of big data analysis and established logistics networks. This year is likely to see New Retail shift from a novel concept to the mainstream. Alibaba expects to grow its current 20-odd Hema grocery stores to 2,000 over the next three to five years, in addition to rolling out New Retail across its Intime, RT-Mart, Auchan and Suning chains, and a host of experimental retail such as vending machines selling everything from live hairy crabs to new cars.
Tencent is hard on its heels, with investments and inevitable digital integration with Carrefour, Yonghui, Wanda Plazas, unmanned WeChat stores and 1,000 7Fresh grocery stores in conjunction with JD and Walmart. Walmart and subsidiary Sam’s Club will likely learn from the experience and follow suit. With many of the main players now jumping on the New Retail bus it will become a hygiene factor – those retailers who don’t will be distinctively disadvantaged and less sustainable. It will no longer be a case of whether to incorporate New Retail, but how best to do it.
JD’s 7Fresh store which provides consumer with helpful information about products on digital displays, among many other integrated shopping experiences
3. Brand Building More Multi-Dimensional
Branding in China isn’t just about WeChat posts, Youku vids and subway ads; Chinese are expecting brands to take them along for the ride, whether they’re online or offline. Although ecommerce and WeChat have been the buzzwords in China for the past few years (around 57% of China’s ad spend was online last year), 2018 is likely to see more brands offering digitally-integrated offline experiences to differentiate themselves from the increasingly crowded online world. A good example of this is experiential retail – yes it’s all tied in with New Retail above. Examples include Starbucks’ Reserve Roastery, New Balance’s brand experience store and Nestlé’s Hsu Fu Chi ‘taste workshop’. This type of innovation isn’t restricted to consumer brands, expect more B2B-focused initiatives like the training kitchens used by Fonterra and Royal FrieslandCampina, yet with much greater digital engagement.
Brands are using a more diverse range of touch points to build preference and advocacy
Ecommerce growth is both raising awareness of new products, categories and origins, but also providing deep data that can help determine local and regional preferences. Smart brands will utilise this data, coupled with regionalised trends and local distribution contacts to cherry pick the best cities to target.
Fuzhou, Fujian is well connected to the world with direct flights and an open-minded, affluent population – one of many Chinese cities with an appetite for foreign goods
5. Premium Digital Content
It wasn’t long ago when Chinese consumers expected everything for free online – fuelled by cashed-up tech firms giving away the crown jewels to acquire customers. The past couple of years has seen consolidation through mergers and acquisitions, maturing business models and tighter policing of IP-theft, leading to an increasingly array of paid-for-services online in China.