Consumers cock a snook at old-style marketing
Print Edition
SHANGHAI office worker Charlotte Pan bought a set of baby shampoo and skincare products from Japan as a Spring Festival gift for her friend’s nine-month-old baby son.
“Lunar New Year gifts are no longer restricted to new clothing, like when I was a teenager,” she said. “Today, we have a wider choice in buying holiday gifts.”
In the Year of the Rooster, there are plenty of new trends for retailers to crow about.
Ordinary merchandise of the past, often seen as inferior or beset by health and safety concerns, no longer rule the roost. Consumers are moving into more esoteric shopping, with online shopping and imported goods at the forefront.
Snack foods, personal care products and cosmetics are among the fastest growing purchasing segments, according to Kantar Worldpanel.
Directly imported merchandise comprises 30 percent of purchases at Walmart’s membership-only Sam’s Club, with growth in areas such as imported fruit, premium dried foods and liquor.
Walmart, which launched its Lunar New Year sales in early January, saw brisk sales of traditional Chinese delicatessen foods, premium wines and chocolates.
Marybeth Hays, chief merchandising, marketing and supply chain officer at Walmart China, said the company sources products from 28 countries and has been stepping up collaboration with local suppliers.
“Taking my two-year old son to the supermarket would have been such a tedious task during the busy Spring Festival period, so online shopping was a blessing,” Shanghai resident Miriam Yuan said of her pre-holiday purchases.
She ordered traditional Chinese foods for elderly relatives in her hometown of Beijing and had the gifts sent there by courier.
Consumers born after the 1980s made up 77 percent of online shoppers who placed orders on Alibaba’s Taobao in the run-up to the Lunar New Year. Some 200 select local specialties foods on Taobao attracted buyers in 365 Chinese cities during the holiday shopping period.
Alibaba’s Tmall said its imported goods unit, Tmall Global, doubled the number of categories of goods on its platform to more than 3,700 in 2016.
The majority of new Tmall Global shoppers last year came from lower-tier cities, with almost a third from third- and fourth-tier cities in China. That compared with about 24 percent in the existing customer base.
“For consumers, buying items directly from their countries of origin assures them that they are getting genuine items, often associated with a particular heritage and craftsmanship,” said Daphne Kasriel-Alexander, consumer trends consultant at market research firm Euronomitor International.
This new trend of wanting to see where products originate prompted Taobao to initiate live-streaming broadcasts in late December, allowing shoppers to get a close-up look at the farms producing food for sale.
Senior researcher Mo Daiqing at China E-commerce Research Center said digital shopping added a new dimension to the traditional Lunar New Year holiday.
“Various promotions through online channels especially local specialty products, also provided a retrospective on traditions that might otherwise have seemed distant to the modern digital generation,” she noted.
Foreign consumer companies have also been quick to market their products under a premium mantle.
French company L’Oreal last year upgraded dozens of boutique shops in China to offer beauty advisors and storefronts featuring skin and hair care products.
L’Oreal Group China Chief Executive Officer Stephane Rinderknech told a media briefing last month that the company will continue to expand its product portfolio according to consumer demand.
Last year, the company introduced the Roger & Gallet perfume brand and personal care brand Ultra Doux. Currently, 23 L’Oreal brands are available in the China market.
“We believe there’s huge growth potential in the beauty business in China, thanks to the nation’s massive middle class and the rising affluence of more than 200 cities,” Rinderknech said.
L’Oreal China e-commerce sales jumped 10-fold in the past five years, and China became the second largest global market for the company in 2015.
Korean brands are also favorites of young Asian consumers. Beauty brand Too Cool for School invested US$6 million for a 60 percent stake in a joint venture with Shanghai Too Cool Cosmetics. The venture will market South Korean cosmetics in China.
“Brands will have to offer consumers more than just convenience,” said Delon Wang, trends manager for the Asia-Pacific at Mintel. “They will also have to emphasize their ethnic and cultural authenticity.”
Consumers are no longer just interested in hunting for bargains online. They also want easier payment systems and faster delivery. They want to try new things from around the world, and they want assurances that paying more means higher quality.
At JD.com, sales of items costing a minimum 50,000 yuan (US$7,249) tripled last year, while luxury items attracted more buyers from lower-tier cities than from big metropolises like Shanghai and Beijing.
Ahead of Spring Festival, JD.com reported that wine, dried fruits and nuts, and fresh food were the top selling products. Home appliances such as cleaning machines and air purifiers were also among the big sellers. Fresh food sales climbed fourfold, while imported fresh food surged 14-fold, especially among consumers aged 26 to 35.
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