The Chinese are the highest spending shoppers, globally. When they travel abroad there is a boon for brands and retailers, so it is no wonder that destinations are clambering to attract these high-spending travellers to their stores.
Shopping is the key reason for travel outside of China. Nielsen’s 2014 Mainland Chinese Luxury Shopper Survey cited shopping as the main purpose for 97 percent of respondents, compared to 84 percent who listed sightseeing and 72 percent who listed attractions/entertainment. The most popular categories for purchases on trips were accessories (71 percent), and high-end cosmetics and skincare (70 percent); while 63 percent bought watches and jewellery, 62 percent clothes, and 52 percent wine or fine liquor.
During their travels the Chinese will spend on average US$5,400 each, 21 percent more than the average for all overseas tourists. The Chinese outbound tourism market is expected to double in size, and spending projected to triple, by 2020.
The peak travel time for long haul trips is Chinese New Year. The goal is personal spending and purchasing gifts for those back home. The biggest attraction of shopping is the ability to buy the latest product lines at a lower cost than in China.
Chinese consumers are becoming more sophisticated and discerning and whilst there remains a keen appetite for brands, the penchant to display social status and wealth is becoming more subtle.
Time and cost are considered the key factors for Chinese travellers when selecting shopping destinations. The more distant the location, the more vacation days they have to take off work, which also means signing up for a more expensive travel package. Many consumers still prefer to save on their travel expenses so they can spend more when shopping, so destinations nearby in Asia are popular. And, with the rise of online shopping across borders there is plenty of motivation to shop from the comfort of home.
So, the tourism industry requires a targeted and focused response to incentivise Chinese travellers not only in choice of destination, but also to improve shopping activities on the ground. Factors to consider:
New destinations are trying to work out how to get themselves on the Chinese travellers’ itinerary. Brands and shopping precincts, outlets and malls seeking international growth opportunities are pulling out all the stops to entice the Chinese tourist. Everything from your meet and greet, improving in-store experience, products and services – apps, ease of payments – accepting renminbi and having UnionPay terminals, recruiting Mandarin-speaking staff, Chinese-language signage, websites and maps, products marked as “authentic”, “limited edition”, inducing/educating tour guides/agents, airport pick-ups, gifts wth purchase, discounts, and VIP cards – to being ready for the Chinese holiday season, is integral to being a destination of choice.
By making small adjustments to service ethos thereby ensuring a memorable, easy, and stress-free experience, retailers and brands can stay one step ahead of the competition. Brands and retailers are in the consumer loyalty, positive word-of-mouth, and repeat sales business, in a competitive market that is growing exponentially year on year.
Quality is the most important deciding factor for purchases. A good quality product drives traffic. The Chinese consumer is well-informed on brands and many consumers curate what they will buy before they even reach their destination. If projections hold, Chinese shoppers will account for more than half of all luxury sales by 2025.
The endurance of luxury brands with the Chinese consumer is their perception of quality. In the Nielsen survey more than half (56 percent) of respondents link quality with luxury, 46 percent connect the goods with “fine design”, and 40 percent highlighted “established heritage”. Other purchase drivers include the fact that luxury goods give consumers an image of having taste and being different, and the idea of luxury goods as a self-reward.
Although China’s ongoing anti-corruption campaign has put a dent in luxury sales domestically, the luxury category continues to have legs with the Chinese traveller, for both price and quality. The Nielsen survey indicated channels for purchasing luxury goods overseas were brand stores (26 percent), followed by airport duty-free stores (24 percent).
Understanding the motivations and expectations of the Chinese consumer is essential. Firstly brands need to keep in mind that Chinese shoppers, whether in London, Paris, or Sydney, are seeking a bargain. Used to discounts at home, even on luxury brands that have courted customers with sweet prices, they expect to receive special treatment, which generally translates to discounts. This can be an uncomfortable prospect for luxury houses that see “discount” as a dirty word.
When setting a price it is important to set standards and reasoning, including minimum spend level, and apply this consistently across all outlets in a location. Tax refunds or other discount incentives should be handled similarly. Make sure staff are trained on handling these situations.
A gift with purchase is a strategy often used to sweeten the deal, such as luxury skincare samples or gift sets, perfume, and small accessories.
4. Media Promotions
Driving positive word of mouth through marketing and communications, quality, design and heritage is essential for brands targeting Chinese shoppers. It is important to have an established relationship and create the desire before the plane lands.
Chinese language editions of popular magazines have become a prevalent strategy to tap into the growth, power and influence of the inbound Chinese tourism industry. The special editions are mostly distributed exclusively outside China and have little or no overlap with their sister titles produced in China.
Global media outlets are producing special Chinese editions of the world’s most elite glossies. Indeed, titles like Vogue Paris, Condé Nast Traveller, Vogue Travel in France, Harper’s Bazaar France, Vogue Australia and Harper’s Bazaar Australia now create local Chinese language editions. Unlike regular editions these special editions are often distributed for free in upscale locations, such as five-star hotels, department stores and cultural spots in a city, and are driven largely by luxury brand advertising partners.
Harpers Bazaar Australia has been offering a free special Chinese language edition dedicated luxury fashion and lifestyle magazine, in partnership with the City of Sydney, in digital and print formats, since 2013.
Shopping is tailor-made for the Chinese social media and ecommerce platforms. These platforms with hundreds of millions of subscribers play a pivotal role in the commercial and personal life of Chinese consumers. Shoppers have high engagement with online platforms and they are willing to share their experiences. Research is indicating over 60 percent of Chinese shoppers visit social media channels and review user recommendations prior to making a purchase decision. This is prime territory for marketers who are increasingly seeking to create targeted brand awareness programmes on channels, blogs and forums to maximise the reach to potential customers.
Harrods was the first UK retailer to seriously invest in social media in China, and now has 51,000 followers on Weibo. In contrast luxury brand Burberry has 92,000 followers.
Most Chinese shoppers travelling abroad have undertaken extensive research on what to purchase before they leave home, according to the Nielsen survey. 90 percent of Chinese travellers plan their luxury goods purchases prior to travel, while 38 percent know exactly which products they will be buying. They are doing their research online, with 50 percent heading to luxury brands’ official sites and 49 percent to social media pages as their primary source of information.
The total number of Chinese cross-border online shoppers has reached 18 million; 78 percent of which are mobile shoppers. According to a Nielsen survey, commissioned by PayPal, Chinese cross-border shoppers spent RMB216 billion in 2013 – with up to 35.9 million online cross-border shoppers expected to spend up to RMB1.0 trillion a year by 2018; Chinese mobile shoppers spent $16.7 billion in 2013. Unlike the high role of duty-free shopping for those traveling abroad, convenience (75 percent) and ease (59 percent) were the top reasons given for buying online. Online retailers with reviews of of “reliable”, “reasonable price” and “good quality products” are the most popular.
Deciding whether or not to adapt shopping offerings to Chinese tastes and customs, and/or online and offline, is something that cities, brands, malls and retail outlets seeking international growth opportunities will need to address.
The opportunity exists for greater use of digital forums and channels to promote brands and retail destinations to the China market. A survey undertaken for this paper on a number of large retail outlets, who are using digital channels in China, demonstrated the lower than expected performance of these platforms. The increasing sophistication of the Chinese shopper leaves the way open for a much more targeted, cooperative and strategic response to build profile at a country, city, brand and retail level in the China market, to foster tourism.