As new COVID-19 infections cease, and life starts returning to normal, reopening businesses has become the top priority in China. After staying home for more than two months, consumers are itching to return to marketplaces and rediscover the shopping and entertainment they've sorely missed.
According to the country’s official data, commercial centers in many cities across the nation have resumed over 50 percent of their operations. In Shanghai, the largest commercial hub in China, over 70 percent of day-to-day businesses have reopened, including shopping malls, restaurants, and luxury outlets. In Chongqing, one of the biggest cities in southwest China, almost all of the shopping centers have resumed business, and customer flow in those spaces has consistently exceeded half their normal amounts, as per the local commerce commission.
As the country’s spending-starved consumers return to their usual consumption tendencies — if not the much-hoped-for “revenge spending” binges — its shopping malls face the challenges of getting out of a recession and setting up new business plans to deal with the havoc COVID-19 is creating overseas.
The worst has passed in China, and the urge to shop there is returning. But, in the meantime, stores have had to completely restructure how they market and sell their products because of the pandemic.
As opposed to just reopening their physical stores, many commercial centers hope to boost consumption by creating new forms of shopping like online livestreaming sales, KOC virtual “try-on” videos, and virtual reality (VR) shopping. Even in the country with the world’s most advanced e-commerce systems, plenty of stores had to quickly adjust their ideas about e-commerce in order to stay afloat during China’s battle against the coronavirus.
Overall, most stores choose to either enter a known sales platform or rely on their own customer networks to curb losses. Big e-commerce platforms like Tmall and JD.com have a certain type of traffic, so a lot of brands promptly built e-stores and campaigns that paired well with those audiences. But stores also chose to build up their own traffic by investing in customer relations during the outbreak via WeChat groups, DingTalk, and Douyin (all effective ways to initiate and handle O2O transactions).
SKP-S, a high-end luxury department store in Beijing that promotes the concept of “shopping at an art museum,” recently launched a WeChat Mini Program called “Disco on Mars.” The page features techno music, avant-garde graphic design, and images of models wearing the newest collections. The style of the site is innovative enough to attract the SKP-S target user and gain reposts on WeChat, but purchasing links also makes the Mini Program a sales driver.
Meanwhile, the Parkview Green Mall in Beijing launched online livestreaming services for brands wanting to entertain and inform customers as much as sell to them. Lululemon invited professional educators to its mall store to offer online livestream training sessions and at-home workouts to enhance the customer experience. But by featuring the brand’s latest in-store items, these livestreams also bought in profits, according to its sales manager. Similarly, the Joy City shopping center in Xidan, Beijing, organized over 20 livestream promotions for its brands during the COVID-19 outbreak. “The sales in the past three hours just reached our regular weekly profits, and the number of customers I served during a livestream roughly equaled seven months of customer store traffic,” said one Estee Lauder salesperson.
Sadly, offline stores were in trouble long before COVID-19 struck China; the coronavirus only catalyzed this change. “You can look at stores reopening as a pressure test,” said Paul Wang of the global marketing agency Kantar. “There are, in general, two types of self-rescue for commercial centers: go online and go O2O. But, either way, new retail has to be creative.”
To make full use of their physical spaces, many department stores have planned marketing events for their reopenings. SKP Beijing, for example, is hosting pop-up stores that will bring in brands that are extremely rare in mainland China as well as limited-edition collaborations that will only be available at the physical stores. This encourages consumers to come in and hunt for treasures, and malls can create even more online buzz by inviting KOCs or movie stars, which also boost in-store sales. It’s no wonder malls are seeing long lines outside their stores for many of these reopenings.
They are also an opportunity for stores to collect big data as well as better connect with consumers. Digitalization has been slow in most traditional department stores in China, but brand stores have various channels at their disposal to implement marketing campaigns that integrate e-commerce advantages.
But since many online brand communications and livestream sales are outside a physical store’s supervision, the right management is necessary. Youfang Mall in Chengdu enlisted “customer ambassadors” to help customers solve problems in both physical stores and online brand sites during the COVID-19 outbreak. Any problems with membership issues, supply chain questions, online discounts, and service quality issues were reported to mall executives.
Despite both consumers and sellers eagerly looking forward to shopping sprees, many commercial stores and entertainment venues in China have announced that they've temporarily closed again to help with epidemic prevention. Venues like KTV and internet cafes have closed throughout China, and although remarkable progress has been made to contain the virus, authorities warned about new potential infection risks as recently as March 18, even though the country hadn't seen any new locally confirmed cases for the first time.
In first- and second-tier cities, most commercial centers have created strict rules to help prevent the virus from re-emerging. Security staff at mall entrances check customer health and scan QR codes for confirmation. Thermometer machines cover nearly every corner in business districts so that customer health can be monitored at all times. Sometimes, customer ID and contact info registration are required in shopping centers in Beijing, Hangzhou, and Jinan.
In Shanghai and Beijing, restaurants require customers to be seated separately with at least one empty table between them. “The rules are very clear and strict, they even set chairs with signs on them reading ‘one person only’,” said Eva Chung, who works near Shanghai Xuhui CBD, adding that she felt secure and nervous at the same time but still chose to enjoy dining out.
Resuming business will be a top priority for every company in China in the short run, yet department stores and luxury retailers are expected to bounce back slowly because people could “restrain spending on goods due to job loss and psychological scars,” according to a senior economist from the World Economic Forum. The post-virus era might see more business and economic problems, but consumer confidence is sure to return to China.