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Updated on 11 May 2020 to include category growth insights and new traffic data.
Chinese retailers are ~2 months ahead of their Australian counterparts in battling an abrupt disappearance of footfall during their peak spending season from COVID-19. China steadily released the restrictions imposed to tackle the coronavirus (COVID-19) pandemic and formally moved into the recovery period in April with the re-opening of Wuhan.
The hope for Australia is that the retail industry can leverage the ingenuity observed in China to act quickly and emerge more evolved and more resilient. Despite differences in public health and government stimulus responses, Australian retailers will benefit greatly from understanding how retailers have operated under restrictions in China.
The industry is watching China with anticipation and there are already important insights to assist Australian retailers as they begin planning for recovery:
- The frontier for retail recovery is re-building community confidence in safety.
- Physical store re-openings could begin soon after the curve bends.
- Retail categories are entering the recovery period at four-speeds.
- Local armies of community shopping agents have risen to become a powerful channel.
- Mega-sales events hosted by cross-industry collaborations are being planned.
- Physical experiences are being delivered virtually or delivered through open channels.
Our experiences demonstrated how quickly consumer’s preferences and expectations had shifted dramatically during this pandemic. Chinese companies with long-term strategic planning are learning from this experience, thus are accelerating their digital transformation and improving on more agile business models to be better equipped to deal with future challenges.
Be prepared
How can Australian retailers leverage China’s experience for their own recovery?
- Demonstrate a vigilant safety-first culture to win the confidence of customers and staff alike.
- Identify the trigger points for re-opening stores (i.e. when the curve flattens, when restrictions are lifted, when footfall reaches a certain level) and consider options to change opening hours and staffing levels over time.
- Look for opportunities to work collaboratively with local stakeholders for a synchronised response.
- Consider a remix of categories and price-points, and ways to shorten the merchandise buying cycle.
- Be prepared for rapid growth of C2B channels supporting local communities and local businesses.
- Start assessing inventory pain points and prepare to respond to, or drive, major clearance sales events.
- Take the opportunity to be creative with how to translate winning physical experiences digitally.
This article reflects situational perspectives and conclusions as of the title date. All financial data reported in Chinese local currency have been converted using a common spot rate as of 3 January 2020 to remove the currency effect and allow local comparison.
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