WundermanThompson-TranscendentRetailAPAC2021_81页_11mb

Transcendent Retail: APAC Summary

Core Content

This report by Wunderman Thompson Intelligence, in partnership with Jing Daily, explores the evolution of retail in China and its global influence. It highlights how China has transformed from a manufacturing hub to a dominant player in online retail, setting trends that are now being adopted worldwide. The report analyzes key retail trends, their implications, and the lessons they offer to brands in other APAC markets and beyond.

Main Trends and Key Insights

Blended Channels

1. The Clicks-and-Mortar Store
   Physical stores are merging with digital experiences. Brands are creating hybrid models that integrate online features such as gamification, personalized interactions, and social commerce into offline spaces.

   • Burberry's Open Spaces in Shenzhen uses a WeChat mini program to offer in-store activities and personalized rewards.
   • L'Oréal's Shanghai store combines beauty products with immersive experiences like a cycling simulator.
   • TX Huaihai Youth Energy Center brings online stores into the physical world, featuring pop-up shops and leveraging a centralized digital point-of-sale ecosystem.

2. The Rise and Rise of Livestreaming
   Livestreaming has become a core part of China's e-commerce ecosystem, offering a blend of commerce and entertainment.

   • Platforms like Taobao Live have pioneered this trend, now replicated globally.
   • During the pandemic, livestreaming became a necessity, with even CEOs and actors participating.
   • 26% of Chinese e-consumers say livestreaming would encourage them to buy more on social platforms in the future.

3. Brands Get in the Game
   Brands are increasingly using livestreaming to sell their own products, moving beyond just promoting third-party offerings.

   • Viya launched a premium instant noodle brand, generating RMB 10 million in sales in one event.
   • Li Jiaqi (China's Lipstick King) has expanded into entertainment and IP creation, including anime and films.

4. Branded Short Films
   Brands are using short films to connect with consumers on a deeper emotional level.

   • SK-II has produced impactful films addressing social issues, such as the 2016 Marriage Market Takeover, and launched a global content studio in 2021.
   • Lexus partnered with a director to create a short film that won awards at the Berlin International Film Festival.
   • These films often tie into major cultural events like the Lunar New Year, International Women’s Day, and the Olympics.

5. Boomer Digital Migration
   Older consumers are increasingly engaging with digital retail, driven by convenience and necessity.

   • Alibaba's Taobao reported a 30% increase in older users during the pandemic.
   • The silver economy in China is projected to reach RMB 5.7 trillion by 2021.
   • Platforms are adapting with features like larger fonts, simplified functions, and voice-command systems to cater to seniors.

Shifting Influence

6. Key Opinion Leaders (KOLs) as Brands
   KOLs are becoming more than just influencers; they are launching their own brands.

   • Viya and Li Jiaqi are examples of KOLs who have created their own product lines.
   • KOL commissions can be as high as 30–40% of sales, which is costly for brands.
   • Despite this, KOLs offer a strong platform for reaching a broad audience.

7. Democratization of the Influencer
   Brands are moving away from KOLs to Key Opinion Consumers (KOCs) due to high costs and fraud concerns.

   • KOCs are smaller, more relatable, and trusted by their audience.
   • Xiaohongshu (Little Red Book) is a key platform for KOC marketing, favoring smaller accounts and topics over follower-based content.

8. Meet the Virtual Influencer
   Virtual influencers are gaining traction, especially in the gaming and entertainment sectors.

   • Bilibili is a major hub for ACG (Anime, Comics, Games) virtual idols.
   • Luo Tianyi, a virtual idol with over 5 million followers, has appeared in major events and collaborated with brands like KFC and L'Occitane.
   • Virtual influencers require significant technical support and are currently more viable through major platforms rather than individual brands.

9. Five Influencers to Watch
   The report identifies key influencers across different categories, including Viya, Li Jiaqi, and Luo Tianyi, highlighting their impact on consumer behavior and brand engagement.

Created in China

10. TikTok Takes Over the World
    TikTok, originally Douyin in China, has become a global phenomenon, driving social commerce and content creation.

    • Its influence is evident in the spread of livestreaming and short-video marketing.

11. Shein and the Race to Rule Ultra-Fast Fashion
    Shein has revolutionized the fashion industry with its fast fashion model, leveraging data and digital tools to rapidly produce and sell trendy clothing.

    • It has become a major player in the global market, especially in Southeast Asia.

12. C-Beauty Goes Global
    Chinese beauty brands are gaining international traction, offering high-quality, affordable products.

    • Tmall and Lazada are key platforms for C-Beauty to reach global consumers.
    • These brands are often promoted through KOLs and livestreaming, creating a new model for beauty marketing.

13. Fintech's Reckoning
    Fintech is playing a growing role in retail, enabling seamless payment systems and financial services.

    • Alipay and WeChat Pay are central to China's e-commerce ecosystem.
    • Cross-border e-commerce is expanding, with Alibaba leading the charge through platforms like Lazada.

The New Luxury

14. Hard Luxury Goes Online
    Luxury brands are embracing digital channels to reach consumers, offering virtual experiences and livestreamed events.

    • Alibaba and Tmall have become platforms for luxury brands to showcase and sell products.
    • The integration of AR/VR and digital avatars is transforming the luxury shopping experience.

15. Virtual Possessions
    Virtual goods and experiences are becoming a significant part of the retail landscape.

    • Gaming and social media are key drivers of virtual purchases.
    • SK-II Studio and L'Oréal are exploring virtual content to engage consumers.

The Socio-Political Consumer

16. Guochao Commerce
    Guochao (national trend) is a growing trend that blends traditional Chinese culture with modern fashion and technology.

    • This trend is especially popular among millennials and Gen Z.
    • It reflects a desire to connect with Chinese heritage while embracing global influences.

17. The Ethical Consumer
    Consumers are becoming more conscious of social and environmental issues.

    • Brands are expected to align with ethical values and sustainability.
    • This trend is influencing product development, marketing strategies, and brand reputation.

By the Numbers

• 52% of China's retail sales will originate online in 2021, compared to 29% in South Korea and 15% in the United States.
• 26% of Chinese e-consumers say livestreaming would encourage them to buy more on social platforms.
• 11.2% of China’s internet users are over 60, and 26.3% are aged 50 and above.
• 37 Chinese mobile titles earned over $100 million in overseas markets in 2020.
• Tmall and Lazada are leading the charge in cross-border e-commerce, with Lazada opening a cross-border innovation center in Nanning to source and train livestreaming talent.

Takeaways

• China's e-commerce is at the forefront of global retail innovation, blending digital and physical, commerce and entertainment.
• Livestreaming is a powerful tool for both product promotion and direct sales, with growing global adoption.
• KOLs and KOCs are reshaping influencer marketing, with brands moving towards more cost-effective and trustworthy options.
• Virtual influencers are an emerging trend, especially in gaming and entertainment, with Bilibili and Alibaba leading the way.
• C-Beauty and ultra-fast fashion are gaining international recognition, driven by affordability, quality, and digital marketing.
• The silver economy is growing rapidly, with senior consumers becoming a significant market for groceries, daily necessities, and electronics.
• Guochao and ethical consumption are key trends influencing brand strategy and product development in China and beyond.

Acknowledgements

• James Bay, Greater China Managing Partner, Wunderman Thompson
• Chen May Yee, Content Director, Jing Daily
• Sky Canaves, APAC Director, Wunderman Thompson Intelligence
• Arnold Ma, Founder and CEO, Qumin
• Zhao Hui, Spokesperson, Lazada Cross-Border E-commerce Innovation Center
• Nader Mousavizadeh, Chief Executive, Macro Advisory Partners
• Data sources: Wunderman Thompson Future Shopper Survey, eMarketer, China Internet Network Information Centre, Sensor Tower, iMedia Research