Blog Post - Patrick Munden, Aug 6 2020

What can retailers learn from China’s COVID-19 experience?

What can retailers learn from China’s COVID-19 experience?

The rise of China has captivated the world. In just a few decades, the country has developed into one of the world’s most thriving regions. Global influence. Supercharged economy. Technological prowess. The world now sees China as a force to be reckoned with. But in 2020, it also sees China as something else: a test case for how to best battle the COVID-19 pandemic which has swept the globe.

Despite controversy over China’s initial response, there’s no denying that its measures, while restrictive, were indeed effective. After six weeks of tight restrictions, the country was able to report zero new infections in a 24-hour period. By mid-March, restrictions were being lifted – meaning people and businesses could look forward to getting back to a more normal way of life.

Many western countries have accepted that we are now entering a ‘new’ normal, and the same is true in China. Just like over here, retailers have had to change their operations in order to stay open – and in many cases, these changes will persist in the post-COVID-19 world.

Taking inspiration from Kantar’s recent seminal study, we’ve published a report exploring how Chinese businesses have adapted to the pandemic. And how they are moving forward, despite the global disruption of COVID-19.

The move to digital

A fall in offline sales is a familiar story worldwide. But the impact on China was especially severe, with a decrease of 75%. As you’d expect, those who already had mature eCommerce operations in place fared the best. In fact, nearly two-thirds (62%) say they have increased their investments in eCommerce since the outbreak, showing there’s a real recognition to move to digital.

But this investment isn’t just about survival: it’s also about evolving with the times. Eight out of ten retail businesses see the pandemic as an opportunity to accelerate their digital transformation and respond to changing consumer behaviour.

How are retailers evolving? One way is through the integration of physical and digital channels. With online meeting transactional needs, we’re seeing stores shift towards either providing experiences, or further augmented online shopping (i.e. through click & collect). Chinese Supermarkets like Herma were already doing this. But during the crises, beauty brands like Clé de Peau started making use of live streaming and other simple, yet innovative, digital initiatives.

Changing channels

Chinese retailers didn’t just strengthen their existing eCommerce channels – they also invested in new ones. More than half (58%) of Chinese businesses have adjusted their strategies to help reach their customers during the pandemic.

Social media has played a critical role in this and in particular WeChat. In non-essential sectors like fashion and cosmetics, WeChat has become a way for brands and retailers to remain in close contact with customers. In fact, after closing their stores, a common strategy for many businesses was to redeploy staff running mini stores on Wechat to continue engaging with customers.

Another significant way that Chinese businesses have innovated is through fulfilment. Third party Online-to-Offline (O2O) services have played a critical role during lockdown. In the UK, these are limited mainly to takeaway delivery services like Deliveroo. But in China, O2O businesses are far more prominent. Throughout lockdown, they have been able to pick up several items from stores and deliver them to buyers. This has helped many brick-and-mortar stores stay operational even when their doors are shut to customers.

While China is an entirely different market to what we know in the west, there’s still a huge amount that we can learn. Scaling up eCommerce assets and digital infrastructure is important, but so is reimagining marketing, communications and fulfilment, and being able to pivot so quickly in times of uncertainty. Those in China who are tech-savvy, agile, and creative have ultimately been the winners - and as we enter a post-lockdown world, these are exactly the tenets that western businesses should look to learn from.

Our report is one of a series of “Business Fightback” content resources created by Wunderman Thompson Commerce to help bolster businesses in the current Covid-19 impacted climate, addressing the key challenges such as a drop in demand, loyalty and footfall, as well as the new opportunities, including the accelerated transition to online shopping.

View our COVID-19 resources