As countries worldwide go into lockdown to curb the spread of COVID-19, residents of Wuhan recently ended their nearly three-month lockdown. The central government in China has approved efforts by local governments to issue prepaid vouchers worth billions of yuan to boost consumer spending, the South China Morning Post reported. SCMP added that this initiative is ongoing in about 30 cities across China and the vouchers amount to about US$704 million, albeit only forming less than 0.01% of retail sales last year.
Besides the central government, brands are also implementing initiatives to lift consumer spending. Chinese commercial property firm Dalian Wanda Commercial Management Group, for example, is offering coupons worth about US$28.2 million to encourage consumer spend across its 320 Wanda Plazas. The month of April saw the company offering a total of 3.84 million coupons to consumers, with each coupon worth about US$7, China's official state-run press agency, Xinhua, reported. Meanwhile, Shenzhen's Futian District is also handing out 30 million coupons for consumers. The coupons are available for use at shopping malls and restaurants, including One Avenue and Coco Park, Xinhua said. Separately, revenge spending has also taken one luxury brand by storm in China. Hermes's flagship store in Guangzhou posting US$2.7 million in sales a day after reopening, Channel NewsAsia reported.
Brands, especially retailers, were made to close their stores and restaurants in China between February to March when the COVID-19 situation worsened. Despite the closure, companies certainly did not rest on their laurels. Starbucks China and YUM China, for example, were among the brands that used digital means to stay in touch with their consumers. According to the recent "COVID-19 Marketing Best Practice" white paper by R3, Starbucks China has been rolling out its online retail experiences, Starbucks Now and Starbucks Delivers, across the country. First launched in China last June, the online experiences include mobile order, tracking, payment, loyalty and e-gifting. Likewise, YUM China also innovated its product by customising menus for its corporate clients, delivering raw food as part of home cooking kits, and allowing consumers to order food through KFC's mobile app that is tailored to their budget.
F&B and retail were two of the hardest hit categories on China, according to R3. That said, the pandemic has brought about new trends in these two sectors in the country. The white paper said that COVID-19 will hasten the shift from store-based selling to digital or omni-channel retail. Major retailers might have the scale and logistical network to withstand the disruption. However overall, companies that have invested in online retail and are building their digital ecosystems will be more resilient during this trying period, and also post lockdown.
Why brands in China can bounce back quickly
Having survived the lockdown, China has now become a case study for brands worldwide when it comes to post-lockdown recovery. Here are the four factors that contribute to faster recovery:
1. Online customer community
The high levels of internet adoption and mobile phone use in China has already made app-based communication a central part of marketing strategy. This has benefitted brands as they can engage with and track consumers without relying on in-store interactions or experiential marketing.
2. Digitally-optimised ecosystem
In China, innovative companies view digital marketing as more than just increasing the number of social and digital campaigns, R3 said. Instead, it means that everyone touch point is available to be actioned online, and this has enabled fast-recovering companies to minimise loss of engagement and obtain revenue in areas such as delivery.
3. Clear marketing process and accountability
Communicating key messages and tactical responses to numerous employees and consumers requires streamlined creative, production, and approval processes. According to R3, brands that are earning consumers' loyalty have put in place clear processes and accountability measures.
4. Innovative products and services
The speed and agility in offering relevant and helpful services to consumers have contributed to revenue during trying times. From customised menus to corporate services and contactless solutions, R3 explained that brands that act quickly to fill gaps in the market have gained new consumers and strengthened existing relationships.
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What brands in SEA can do to recover post lockdown
The digitally-optimised ecosystem and online customer community are certainly two factors that Southeast Asian brands can adopt. Nielsen's global client delivery leader, Southeast Asia, Craig Houliston, told Marketing that looking at what their counterparts in China has done so far, brands in this region should focus on O2O marketing and not treat online and offline as separate channels. Instead, they should link both together as a way to capture all purchases.
According to Houliston, the new normal will see more adoption of eCommerce and social commerce as part of a seamless O2O environment with improved supply chain systems to handle changes in demand. He added that moving forward, consumers will continually seek health-related products. Thus, innovating to cater to these needs will be key.
"If there is a recession, it will slowdown the dynamic of 'premiumisation' and manufacturers will need to assess their pricing strategies," he said. When asked how this new norm will impact the marketing and advertising industry, Houliston explained that further digitalisation is required to meet the needs of the smart consumer experience. This will lead to more marketing via social media and online streaming platforms. He added that these changes may lead to a rise in more local brands, especially if local governments offer stimulus packages to help protect local businesses.
If there is a recession, then we can expect shoppers potentially down-trading and shopping around more (especially online) for better deals, and become less brand loyal.
Meanwhile, Forrester Research's senior analyst Wang Xiaofeng said brands should continue to engage with existing customers, especially the loyal ones, and focus on long-term customer relationship and brand value. Additionally, they should also continue to focus on branding and consumers will continue to support brands that share their values, and appreciate empathy, social responsibility and transparency. Wang added:
One thing that brands should not do is increase prices to immediately compensate their previous losses.
Citing Haidilao as an example, she said the restaurant recently apologised for raising prices, adding that the price hike was an error on its part and that the prices of its dishes would return to pre-pandemic rates, Lianhe Zaobao reported.
Other ways to chart your road to recovery
The COVID-19 pandemic has certainly pushed brands to build an online presence and beef up their digital capabilities. According to a recent research titled "Lessons and business recovery strategies for retail from China" by software company Capillary Technologies, live commerce has becoming an emerging trend to bank upon amidst the COVID-19 sales slump. Taobao and JD.com, for example, have enabled live stream viewers to purchase items while they watch. Meanwhile in Southeast Asia, Lazada, Shopee and Zalora currently offer this capability.
The most resilient retailers surviving this epidemic in China, according to the research, are the omni-channel retailers. Brands that invested in enabling a personalised omni-channel shopping experience are experiencing the fruits of their labour.
Chinese apparel brand Peacebird, for example, started its omni-channel digital transformation journey by integrating online and offline channels. As a result, it experienced a consistent increase in its online sales despite the uncertain in-store sales, the research said.
Separately, Peacebird recently said it will focus on the promotion of omni-channel sales and flexible supply chain. This is in a bid to promote the application of flexible supply chain on a larger scale, improve the supply chain's efficiency, and enhance the quick response and flexibility of production to market. It also plans to further strengthen the design and development, and launch more attractive products to reward consumers in the outbreak. This is in an effort to strengthen the online communication and interaction with consumers. During this year's Lunar New Year, Peacebird said it created multiple sales models such as online discounts and live commerce, inviting fans to "go shopping in the cloud" with free delivery. Understandably, this has paid off during the pandemic.
Meanwhile, Capillary Technologies' research said that offline teams should coordinate with the online teams to divert traffic to their eCommerce website or app and clear out the inventory. "Brands can also improve the quality of customer engagement across relevant #staySAFE channels by merging store behaviour data with CRM data to communicate and notify its customers about store operating hours, delivery timelines or to send any form of notifications," the research explained, adding:
Integrating data across online, social and offline channels can improve the micro-segmentation of customers and enhance the relevance of personalised communication.
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