“Think about e-commerce platforms and how many times you use them per day. Probably no more than once,” said Mei Chen, head of fashion and luxury UK, US and Northern Europe at Alibaba Group, during the Shoptalk Europe retail show in London last week. “Now if you go to China and you ask consumers how many times they use our Alibaba e-commerce B2C app, they come to our platform between eight to nine times,” she continued. “And on average it's more than half an hour per day, according to third party data from consultancies.”
More than half of global e-commerce sales come from China, which is home to some of the most innovative retail technologies and business models. Mei Chen from Alibaba and Claudia Vernotti, co-founder and director of ChinaEU, discussed the specifics of the Chinese market and the latest innovations in the luxury industry in a panel at Shoptalk Europe. The retail show, which took place from June 6 to 8 in London, saw over 3,000 experts from the industry come together to share insights through exhibits and panel discussions.
“If we think about the luxury industry in Europe or in the US, in comparison to China, the consumers are on average 10 to 15 years younger than the ones that we have in London, Paris, Milan and New York,” explained Chen in conversation with Deborah Weinswig, founder and CEO of the research and advisory firm Coresight Research. “So for any international luxury brands trying to replicate what they're doing in Paris, London or Milan, in China it will not work for a number of reasons.” Platforms like Instagram and Google that work well in Western markets, for example, do not exist, and even if some do, they are not the primary space in which consumers in their 20s and 30s interact with brands.
Gen Z as a central luxury consumer
Given the younger age of the target group in China, luxury brands have to consider marketing to them differently. “The consumers that we have, Gen Z, or in Chinese you would call them the ‘Post 2000’, so the consumers born after the 2000s, are incredibly interested in experiencing new ways of engaging with brands,” Chen explained. That’s why, for the Chinese market, brands have been using technologies like augmented reality for virtual try-ons and livestreaming for years. In keeping with the so-called ‘China speed’, innovations are implemented much faster than in Europe or the US. Over here, traditional luxury heritage brands like Burberry have just now also started to launch digital collectibles, better known as non-fungible tokens (NFTs), to attract the digitally-savvy younger generation.
Livestreaming is something that has been around in China for more than a decade, and, especially in the world of luxury, there have been some upgrades since the pandemic. For example, livestreams from one-to-many and especially one-on-one have gained popularity. Additionally, when shopping malls around the world were closed during the pandemic, the empty stores were used as offline locations for livestreaming in China, Chen explained. “Most brands in China, especially in shopping malls, leveraged sales assistants who essentially used their phones, no complex technology like big cameras or production teams, to do live streaming for their customers to showcase the latest collections and products,” she said.
With so many innovations happening digitally in China, the physical store takes on a new role as well. “It's not just about online offline merging together, it's about reimagination,” said Claudia Vernotti of ChinaEU. According to her, physical stores are becoming experimental fulfilment centres, where the customer is the focus, in order to increase customer satisfaction and meet demands.
The customer itself changes its role and is no longer just a shopper, but also a contributor and ambassador. “There is this revolution that is of course backed by technology, which needs to recognise the user across different channels in a seamless way,” she concluded.