On April 21st, Clever Age participated in a signature event, the Luxury Symposium organised by the French Chamber of Commerce of Hong Kong that brought together movers and shakers of the luxury market of Asia with a strong focus this year on digitalisation and China markets. Despite Covid, we had more than 300 physical and remote participants connected.
For many years, China has been shaping the retail and luxury digital experience with established marketplace platforms going retail by enabling online-to-offline (O2O) commerce, bringing new innovation to the market with live streaming players and adapting to new post-Covid consumers behaviour. The luxury and retail market in China has seen the most exceptional and premium customer experience which dynamically drives brand loyalty and growth in revenue.
Our panel moderated by Yvon Le Renard, Director of Clever Age Asia covered brought topics across Retail, Luxury and Global Travail Retail while focusing on four key trends:
- Trend #1. Live Video Streaming
- Trend #2. Sales Assistant to Ambassador
- Trend #3. Global Travel Retail
- Trend #4. O2O Omnichannel strategy
Panel participants were:
- Kim Leitzes (Managing Director, APAC, Launchmetrics)
- Thibault Villet (President, APAC, Tory Burch)
- Jean-Laurent Vilon (Managing Director, APAC, Mazarine)
- As moderator Yvon Le Renard (Managing Director, Clever Age Asia)
Trend #1. Live Video Streaming – Mass versus Exclusivity
Live video streaming as mentioned by Kim has been around for quite some time in China mainly from entertainment such as Karaoke singing or gaming. Covid has just accelerated this phenomena where brands realized they could not afford not to be on those platforms.
With probably the most impressive growth in China recently, Pinduoduo (aka PDD) the social ecommerce platform who has surpassed Alibaba in terms of active users (788.4M) in just a few years. Many other platforms like Bilibili, Douying (Tiktok) have embraced the live streaming phenomena to address Gen Z, that is challenging the well established platforms such as Alibaba and JD.Com. Those two (Alibaba and JD) have dominated eCommerce in China for years and have been challenged by both the uprising of new live streaming platforms as well as the China State Administration of Market Regulation (SAMR) created 3 years ago who recently fined Alibaba of $2.8 Billion for abusing its market dominance.
For the luxury market this live-streaming phenomena is not without challenges and we could distinguish two trends:
On one side, the Mass live streaming is associated with hard discount/promotion which are very popular among certain mass-market product categories (e.g. entry-level cosmetic brands) but not aligned with luxury brand image. This is a red ocean market, heavily discounted, with little margin, so huge volume needed to be generated to survive and you will always have competition on price.
On the other side, exclusive VIP video streaming events for high-end brands with detailed scripting for no room to mis-interpretation to avoid political backlash are taking place. This concept is called Streaming by Design as explained by Jean-Laurent from Mazarine where from the early stage of the project, everything is thought through for the video streaming outcome. This phenomena is now going beyond China where luxury brands are taking the concept at home.
The live streaming will continue to evolve across geography and industries. For instance, we are seeing TMALL moving away from discounted to full price platforms as reported by Thibault.
Trend #2. Evolution of the Sales Assistant role to ambassador
Covid has brought most retail businesses under tremendous pressure to force them reinvent themselves, accelerate their presence online or for some of them unfortunately close shop. One initiative we have observed has been to equip front sales staff to become brand ambassadors by creating content and publishing and promoting brand products to social networks. The success of turning your sales team to brand ambassadors has brought some challenges for brands.
First challenge has been content consistency as well as product promotion on social platforms. Control of self-generated content, mis-alignment with brands, which product to promote, which promotion to push etc.. have been challenging for brands not only from tone of voice, content quality but also for content sensitivity, especially in the context of China. Therefore new skills shall be considered while recruiting new sales staff. During the interview as mentioned by Kim, you might ask, please show me your social account, show me your community, is she/he already a KOC or micro KOL.
Second challenge has been to ensure the relationship between clients and sales staff remains the property of the brands. To do so, many brands have equipped their sales team with WeCom (formally known as WeChat Work prior Nov 2020), a business communication platform for enterprises that includes convenient communication and office automation tools. It offers smooth communication experience with integration to social networks while keeping client data information within the company.
Third challenge was how to incentivise the sales team to become ambassadors and remunerate them for products sold on other social platforms. Multiple compensation mechanisms exist on the market from affiliate marketing tools, conversational commerce to Commissioning Management Platform (aka CMP). Key main activities to be considered shall be : Affiliate Management, Engage & Sell, Share brand materials, Track, Report and Rewards. A dozen platforms exist on the market to address this third challenge.
Trend #3. Global Travel Retail
When it comes to the global travel retail business during this Covid period, we can observe that all duty purchases are happening domestically within China with an acceleration of the Click & Collect, Click & Ship to home from the major duty free reseller.
The second trend which started prior Covid is the development of Hainan, an island located in southeast China known as a Duty Free shopping destination for mainland Chinese tourists. Well Known Duty Free brands have opened retail shops and customers are queuing. Engaging prior travelling on Wechat or other social channels, offering customized experience and continuing engaging post travel seem to be a norm in managing the end to end customer journey.
When the border will reopen, the role of the KOL/KOC won’t change much as the message still needs to be delivered domestically prior travelling.
One major challenge mentioned by the panel, is when the border will reopen and tourists will go back to Japan, Singapore or Milan or Paris, they will expect an enhanced rich digital experience abroad while shopping, similar to what they have enjoyed at home during Covid, otherwise, they could be disappointed by retail shop not have been upgraded for 2 years.
Trend #4. O2O Omnichannel strategy
As mentioned by Thibault, the brand.com is a channel to be re-looked at as there is no longer two platforms such as Alibaba and Tencent who own the market but multiple upcoming platforms which make it even more challenging for a brand to choose from, particularly when regulator (SAMR) may decide to go after one of your preferred platform.
For these reasons amongst others, we at Clever Age have been strong advocates of having your own strategy with your brand.com becoming truly omnichannel by differentiating customer engagement which are chanel specifics (e..g building community, social engagement) while keeping consistency across channels in term of pricing strategy, brand image, product assortment, order orchestration, inventory.
The online sales during Covid, have made Omnichanel no longer an option but a mandatory strategy for a brand to succeed. We have empowered sales associate to become ambassador, they are creating their own content, they are live streaming themself to their customers, if we want to maintain the right brand image and consistency of the experience across touchpoints, we need omnichannel transversal layer to offer services across all channels with clear vision and scalable technology, 360 customer view with enrichment capability and processes to manage data flow from back-end system (stock inventory, pricing etc..) as well as training and compensation for sales team.
This elevation of your omnichannel strategy with your own brand.com will differentiate you from the rest in the long run by being on the driving seat of your data strategy and will enable you to be less dependent on even changing local platforms, especially when data capture and customer relationship is getting out of your hands.
Further reading with an article by Jeremy Andre, Le Point (subscription required – French version)