Home ConsumerRetail Why the future of retail in China is phygital

Why the future of retail in China is phygital

In a country where online and offline are increasingly blurred, China is rewriting the retail playbook

by Robynne Tindall
0 comments

‘Phygital’ has become a buzzword in the retail industry in recent years, referring to blending the physical and digital aspects of the retail journey to offer customers a more immersive, often more personalised, experience.

Examples could include ordering a coffee ahead of time via an app and picking up your order in-store; visiting a store to try on clothes and then ordering the items you like to be delivered directly to your home; or app-based games that reward users with prizes to be redeemed in store.

launchpad gateway

As James Hebbert, Managing Director of Hylink UK, notes, consumers in all contexts increasingly have an expectation of some level of phygital experience. “[Whether in the UK or China] they seek immersive, personalised and seamless shopping encounters that blend digital and physical elements.”

However, China is notable for the depth of its digital adoption, with consumers exceptionally comfortable with using mobile payments and making purchases via digital commercial channels like livestreams.

At China Consumer 2023, William Lau, CEO of Chinese cosmetics company Bonnie & Clyde, described the journey of their average customer in China: first, they go to a shop and find a product, then they read reviews of said product on Xiaohongshu, and then they check prices on Taobao, where they will probably buy it.

When retail was offline only, it was essential that sales were converted in-store, but today, Lau argues, stores are about experiencing the product, telling an interesting story, and building a relationship with the customer.

Read Also  What is Shein? The Chinese fast fashion retailer explained

That relationship with the consumer, in particular, is crucial in a more pragmatic Chinese consumer landscape.

“The pandemic influenced a rethinking of consumerism. Consumers are now gravitating to fewer but better and more unique consumption experiences [that are] connected to brands and brand values,” says Simon Mitchell, co-founder of global design studio Sybarite. “For example, the Chinese customer is consuming luxury brands as a way of life and for the improvement of their quality of life rather than simply as labels and price points.”

Hebbert points to the opening of Louis Vuitton’s first restaurant in China in Chengdu as an example of how luxury brands are combining offline and online initiatives to engage Chinese consumers by creating memorable experiences. In conjunction with the restaurant opening, the brand created an interactive game called “Mah Jump” inspired by Chengdu’s love of mahjong and with backing music from Chengdu rapper Ma Siwei.

Read Also  How China is making payments easier for foreign visitors

These kinds of initiatives may take a little more creative planning, but they can have benefits for brands beyond customer engagement, the foremost of which is data acquisition. At China Consumer 2023, Grace Cheng, Head of Brand Business Development for multi-brand beauty product store Harmay, said that while Harmay focuses on offline stores, when consumers shop in these offline stores, they are rapidly converted onto the company’s CRM programmes, which include over 2,000 private WeChat communities.

The development of technologies like AI and augmented and virtual reality will continue to change the retail industry, and brands need to stay abreast of how consumers respond to and interact with these technologies.

“Ultimately, creatively bridging online and offline experiences is pivotal in engaging more deeply with consumers and driving brand loyalty in today’s competitive landscape,” says Hebbert.

Explore the world of phygital retail at China Consumer 2024

CBBC’s flagship consumer event, China Consumer, will take place in London on 14 October 2024. The event will explore a diverse range of topics, including phygital retail, sustainability in China, and cybersecurity through panel sessions, brand interviews, a networking lunch, and break-out workshops.

Click here to purchase tickets

Launchpad membership 2

Related Articles

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More