Cushman & Wakefield’s reports on the Chinese market have shed light on how the retail sector and consumers responded to challenges facing them in the new reality. What lessons should the Polish retail sector learn from them? Daniel Stańczuk, Marketing & PR Senior Communications Specialist, Asset Services, at Cushman & Wakefield wrote about trends on the Polish market and ways of tailoring strategies to the new reality.
There is no doubt that the COVID-19 pandemic has impacted all global economic processes. No matter what aid governments or supranational bodies (EU) may come forward with, success in business hinges on the ability to adapt quickly to market conditions, consumer trends and sentiments on the broad investment market. It is, however, the proverbial tip of the iceberg as the ongoing coronavirus pandemic also requires changes to the fundamentals underpinning business realities globally. On the one hand, this represents a test of the contemporary, open capitalism with limited state interference, and on the other hand – an interesting study of opportunities created by controlled capitalism characteristic of modern China.
Our economic reality has been underpinned so far by synergy whereby the West benefited from the opportunities to optimize operating costs through manufacturing offshoring to the Far East and the Far East experienced rapid growth thanks to investments by the West. This model was first put to the test in 2008 when the world experienced a major economic crisis caused by the crash on the US financial market, which ultimately plunged the world into a recession. Developed economies needed a few years to regain the ground they had begun to lose to China, which expertly exploited the potential of overseas capital and maintained the functional continuity of its economy without jeopardising its position in the international arena. It remains to be seen which model will be more effective in the long term in the context of the pandemic: the liberal capitalism of Western economies or the controlled capitalism of China.
Cushman & Wakefield’s “Post COVID-19 Recovery” report on the Chinese market reveals how the retail sector and consumers have responded to challenges facing them in the new reality.
Notable trends highlighted in the report that are also seen on the Polish market include Online2Offline, ROPO, omnichannel, and m-commerce.
Online2Offline
This trend has intensified recently in particular as brick and mortar stores in shopping centres are struggling with weaker footfall. To eliminate this problem, some Chinese retailers have opted for online product presentation and enabling purchases solely in physical stores. Some require the customer to visit the store in person to return a product as they accept no merchandise shipping.
The Polish market has also seen the emergence of a range of offers to incentivise and encourage customers to visit a brick and mortar store such as VAT-free shopping or a different discount resulting from such a visit. Another example is the innovative solution introduced in shopping centres under Cushman & Wakefield’s management where customers of online stores operated by tenants running boutiques in shopping centres can collect gift cards to shop in brick and mortar stores once they show confirmation of their online transaction.
ROPO (Research Online Purchase Offline)
Once it was all about window shopping - now we are seeing consumers more aware of using online tools to get to know a product and more determined to complete a transaction. The COVID-19 pandemic has impacted shopping centre footfall to a degree that varies from region to region. However, the reduced footfall in shopping centres has not led to a directly proportional decrease in conversion (number of visits vs retail sales) which remains high.
To unlock the potential of individual target groups, retailers will opt for live streaming or live sales via social media (Facebook or Instagram). In retail schemes under Cushman & Wakefield’s management, online sales are also supported by communication of benefits and recommendations of shopping centre stylists involved in live sales during online streaming.
Omnichannel & m-commerce
Multichannel communication and brand visibility efforts will be ineffective if they do not form a consistent self-regulating ecosystem. This is a domain of omnichannel communication – to make the consumer interested in a brand by using tools that make it possible to reach target customers through various channels.
More and more customers, no matter which generation they represent - be it Generation X, Y, Z, or baby boomers, consume media via mobile devices. The task now is to tap into the potential of such devices, to diversify communication (adapt content to the addressee) and to conduct distribution skilfully through interconnected channels. That’s why we are increasingly relying on solutions combining various platforms and their respective databases that enable content unification or customization. By combining them with loyalty programmes, an appropriate customer relationship management system, customer experience and post-sale services, we are able to build marketing based on emotions and a stronger brand connection. Importantly, in the case of emotion-based communication there is a stronger need for transparency and authenticity in all situations.
The fashion industry has struggled in recent years with many problems dependent on such variables as the environmental impact of clothes manufacturing, the low waste trend, new distribution channels, optimisation of production and logistics costs. In the face of COVID-19, some changes are becoming increasingly relevant – especially changes designed to boost revenue streams rather than just protect businesses against a fall in sales. That’s why brand transparency towards the consumer is strongly correlated with the image, trust and perception of the brand in customer awareness. A discerning consumer will be able to judge messages. To attract the consumer’s attention, not only do brands use marketing tools, but they also show to potential buyers individual stages of the development of collections, sources of materials and components of products. All this is done to persuade us to make a purchase.
In influencer marketing and popular personal branding we buy a story built around an idea behind the person creating it. Therefore, when making any significant changes to a product or any of its components, we should maintain clear messaging and communication to avoid a crisis situation where the brand and the image of the person presenting it may suffer. Modern 360° marketing offers a number of solutions and possibilities to obtain specific measurable effects. Sometimes they require more time, sometimes less. Everything depends on our preparations and consistency of action.
How to adapt a sales strategy to the new reality?
First and foremost, ensure that you build a community around a brand. An open dialogue based on an authentic and simple message helps build a connection and customer loyalty. Various marketing and omnichannel communication tools should be used to take care of it.
Another element that should be included in a sales strategy for the new reality is to use modern tools and distribution channels. COVID-19 has significantly accelerated retail digitalisation - even if opening an own online store is impracticable, it is worthwhile considering solutions offered by social media, marketplace platforms or brokers, for example, auction sites.
Customisation is an important part of a sales strategy. Creation and segmentation of customer databases will enable tailoring a store’s offer to the customer’s individual requirements, preferences and purchase history. With the knowledge of customers and their behaviour, it will be possible to prepare, for example, a special offer to persuade them to make a purchase. Such a database must also be appropriately secured in accordance with the GDPR.
To sum up, I would encourage the development of long-term strategies, but also acting here and now. Recent developments have clearly indicated that we can be sure of two things: dynamics and change. In business and brand image development the focus should be on long-term action in the context of a framework strategy, but specific activities should focus on the here and now - for example, to use the potential of RTM (Real Time Marketing). What’s more, as lies (or half-truths) have no legs, mutual trust and openness to dialogue, wherever required, should be central to running a business.
