Fashion Retail in China: Why Chinese consumers still need retail stores
Fashion Retail in China. According to the National Bureau of Statistics in China, the total retail sales of China consumer goods attained 30.1 trillion yuan (4.49 trillion USD) in 2015. Due to China’s e-commerce boom, online retail sales have been increasing rapidly since 2011 in China. The share of e-retail sales as a percent of total retail sales rose to 12.9 percent in 2015 from 4.2 percent in 2010. Remarkably, among all product categories, online apparel sales had amounted to approximately 760 billion yuan (113.9 billion USD) in 2015.
However, although e-commerce is developing rapidly, the growth rate of online apparel sales has slowed down since 2012. Online apparel is still the biggest part of online sales, but Chinese consumers are becoming more rational and remain committed to physical stores. Thus, what factors drive them back in physical stores?
Fashion Retail in China: Deceptive shopping experiences online cool down purchase f
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Building trust is a recurrent problem for online shops. Consumers have to make a decision according to few product pictures and comments on e-commerce platforms. Over-processed product pictures and fake comments give consumers high expectations, especially in the fashion industry. However, a large number of consumers are very upset when they receive products. Also, about 27.4% Chinese customers complained they had failed at least once to get a refund from online shops offering “Return of goods without reasons within seven days” due to different excuses in 2015. Products quality, lack of physically checking, and fake products are the top 3 concerns of online purchasing among Chinese consumers. In contrast, physical stores allow consumers to look carefully and try on products all the time. Most conflicts in physical stores also can be solved, because physical stores normally pay attention to maintaining brand reputation, try to avoid arguments and largely rely on repeat purchasing. The bad online shopping experience is slowly pushing Chinese customers back to physical stores.
Shopping mall’s new experience attracts Chinese millennials
To compete with online stores, an increasing number of shopping malls are now creating an entertaining experience for Chinese millennials. As the most potential consumer group, millennials have a big purchasing power but are also very fastidious. Nowadays, most shopping malls in China normally have fashion retail stores, cinemas, supermarkets and restaurants, which create a one-stop shopping experience. However, this is not enough to attract Millennials anymore. An increasing number of big shopping malls now not only select Millennials’ favorite fashion brands and restaurants but are also continuously introducing new ideas in stores. For instance, Parkview Green, a shopping mall in Beijing, differentiates itself by its premium positioning. In addition to its good restaurants, but Parkview Green also builds up art galleries, decorates shopping area with artworks, holds art exhibitions and introduces luxury foreign fashion brands which entering mainland China for the first time. Besides purchasing behavior, the art atmosphere and high-end shopping experience also attract many Millennials to post pictures of the shopping mall, which actualises mouth-to-mouth marketing for the mall.
Fashion Retail in China: Same-pricing strategy rebalances online and offline distribution channels
About 75% Chinese consumers compare the price of expensive products online and in retail stores before purchasing. Online & Offline same price strategy brings consumers back to physical stores. Many fashion companies build both online and offline distribution channels, to satisfy consumers’ needs and survive in fierce competition. A large number of these companies try to offer same products at same price online and offline. Back to a few years ago, fashion brands considered online and physical stores are competitors. Thus price discrimination was widely used between online and offline channels. To avoid cannibalizing, online distribution was used to consume outdated stocks by offering discounts. However, the strategy hurt brand’s online reputation and positioning. The rapid development of e-commerce and increasing the importance of online channel force traditional fashion brands to adjust their retailing strategy. Online stores now become an important complementary tool to fill gaps in tier 3 and tier 4 cities that brands do not have physical covers. Companies launch new arrivals online and offline simultaneously, to satisfy needs of Chinese consumers around the country. The same pricing strategy reduces the number of consumers comparing online and offline price. Physical stores gain back their advantage because they provide a better shopping experience and after-sale service for consumers.
Many fashion brands have reported losses in physical stores. However, Chinese fast fashion brand PIECEBIRD, announced it has 3794 retail stores in China until the end of 2015 and will continue expanding. Beyond these offline stores, it also his own online shopping website and presents on Tmall and JD.COM, the two biggest Business-to-Consumer (B2C) e-commerce platforms in China. All distribution channels implement the same strategy for price and promotions. The company successfully distributes in multiple channels and also achieves physical survivals. Integration of online and offline resources strategy assisted PIECEBIRD to achieve 9 billion RMB (1.35 billion USD) sales in 2015.